USD/CAD trades above 1.3300 as WTI tests $49
- WTI trades at its lowest level since January 1st near $49.
- US Dollar Index rebounds to 99.20 area on Wednesday.
- Coming up: New Home Sales and EIA Crude Oil Stocks Change from US.
The USD/CAD pair stretched higher in the last hour as falling crude oil prices made it difficult for the commodity-sensitive CAD to find demand. As of writing, the pair was trading at 1.3302, adding 0.2% on a daily basis.
Heightened concerns over the coronavirus outbreak having a protracted negative impact on the global energy demand continue to weigh on crude oil prices. On Tuesday, International Energy Agency's (IEA) Chief Fatih Birol said they may need to lower their forecast for global oil demand growth in 2020, which is already at its lowest level in the last ten years, due to the coronavirus.
At the moment, the barrel of West Texas Intermediate is trading at its lowest level since January 1st at $49.03, erasing 2.1% on the day.
DXY looks to snap three-day losing streak
On the other hand, a technical recovery seen in the US Treasury bond yields helps the greenback outperform its rivals with the US Dollar Index (DXY) recovering to the 99.20 area in the early trading hours of the American session. Following a drop to an all-time low on Wednesday, the 10-year T-bond yield is up nearly 1%.
New Home Sales data and the Energy Information Administration's weekly Crude Oil Stocks Change will be published later in the session.
Technical outlook
FXStreet analyst Haresh Menghani shares his near-term technical outlook on the USD/CAD pair:
Given the recent bounce from the vicinity of the very important 200-day SMA, the near-term set-up remains in favour of bullish traders. Hence, a move towards challenging monthly tops, around the 1.3330 region, looks a distinct possibility.
Meanwhile, technical indicators on hourly/daily charts have managed to hold in the positive territory and reinforce the near-term constructive outlook, supporting prospects for a further appreciating move amid a fresh leg down in oil prices.
On the flip side, any meaningful pullback might continue to attract some dip-buying near the 1.3260-55 horizontal resistance break-point, now turned support, which should help limit deeper losses, at least for the time being.