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USD/CAD: Key Levels to Watch as Crude Oil Breaks the $70 Support

USD/CAD is on a rebound amid the declining crude oil prices. For the past one-and-a-half weeks, crude oil prices have been trading steadily above $70. However, WTI futures have declined further to trade at the current $69.43. The aggressive spreading of the Delta variant has triggered concerns over the oil demand outlook. As a commodity currency, the Canadian dollar is usually impacted by crude oil prices.

USD/CAD will also be reacting to the weekly US oil inventory data later in the day. In the previous release, API’s figures showed a decline in stockpiles after the prior surprise build. In today’s event, investors will be keen on whether the released numbers will beat the previous draw of 4.728 million barrels.

On Wednesday, analysts expect EIA to release a reading of -2.900 million. The figure is a lesser draw compared to the prior week’s decline of 4.089 million barrels. Better-than-expected oil inventory data are likely to push USD/CAD lower.

USDCAD technical outlook

USD/CAD has extended Monday’s gains after hitting an intraday low of 1.2422 on Friday. At the time of writing, it was up by 0.35% at 1.2550. It is currently trading at its highest level since last Wednesday. On a two-hour chart, it is below the 25 and 50-day exponential moving averages.

In the near term, it is likely to seesaw around the current level at 1.2550. If the bulls manage to move past the resistance level of 1.2580, the path to the psychological level of 1.2600 will be clear. However, this thesis will be invalidated by a move below 1.2500.