USD/CAD finds support ahead of 1.34 as crude oil recovery loses steam
- Canadian inflation softens in November.
- WTI recovers above $48 on Wednesday.
- US Dollar Index stays below 97 ahead of Fed.
The USD/CAD pair fell to a session low of 1.3415 in the last hour before staging a small recovery and was last seen trading at 1.3435, where it was down 0.23% on a daily basis.
Although today's data from Canada showed that the annual CPI eased to 1.7% in November from 2.4% in December and fell short of the market expectation of 1.8%, the loonie continued to gather strength as the commodity-sensitive currency received a boost from recovering oil prices. After the EIA reported that crude oil inventories declined by 0.5 million barrels in the week ending December 14, the WTI rose to a daily high of $48.30 to erase the majority of yesterday's losses. As of writing, the WTI was trading at $48, adding 4.7% on a daily basis.
On the other hand, a renewed selling pressure surrounding the USD in the early NA session allowed the pair to push lower. The US Dollar Index, which fell to 96.55, was last seen at 96.65, losing 0.35% on the day. Today's mixed macroeconomic data releases from the United States didn't receive a significant reaction from the market as investors stayed on the sidelines ahead of the Fed announcements.
- US: Existing home sales increased 1.9% in November vs. -0.6% expected.
- US: Current account deficit increased to $124.8 billion in Q3.
- FOMC Preview: What 9 major banks are expecting from December meeting?
Technical levels to consider
The pair could face the first technical resistance at 1.3500 (psychological level/Dec. 18 high) ahead of 1.3530 (Jun. 9, 2017, high) and 1.3610 (May 19, 2017, high). On the downside, supports align at 1.3390 (Dec. 18 low), 1.3350 (Dec. 14 low) and 1.3290 (Dec. 10 low).