- USD/CAD gains traction after finding support near 1.4000.
- Crude oil recovery on EIA data remains short-lived.
- US Dollar Index climbs into positive territory above 100.
The USD/CAD dropped to a daily low of 1.4006 in the early trading hours of the American session but made a U-turn boosted by the broad-based USD strength. As of writing, the pair was trading at its highest level in six days at 1.4090, gaining 0.06% on the day.
Earlier in the day, recovering crude oil prices provided a boost to the commodity-related loonie. Although the WTI rose to $26.93 with the initial reaction to the EIA data, which showed a draw in US crude oil stocks for the first time since January, it lost its traction. As of writing, the WTI is up only 0.35% on the day at $25.90.
USD finds demand on Powell’s remarks
On the other hand, the sharp rebound witnessed in the US Dollar Index (DXY) helped the pair gather bullish momentum. FOMC Chairman Powell on Wednesday made it clear that the Fed is not looking at the possible use of negative interest rates. Powell further reiterated that fiscal policy needs to play a bigger role in the recovery phase.
At the moment, the DXY is up 0.06% on a daily basis at 100.06. There won’t be any macroeconomic data releases in the remainder of the day and the greenback’s valuation could continue to impact USD/CAD’s movements.
Meanwhile, the data published by the US Bureau of Labor Statistics showed that the Producer Price Index (PPI) fell to -1.3% on a monthly basis in April but was largely ignored by the market participants.
Technical levels to watch for