USD/CAD holds on to daily gains above 1.21 as DXY tests 92

The USD/CAD pair, which dropped to a daily low at 1.2083 in the early European session, gained traction and easily broke above the 1.21 handle. As of writing, the pair was trading at 1.2143, gaining 0.23% on the day.

Despite this recent upsurge, the pair continues to trade in a relatively tight 60-pip trading range on Tuesday amid a lack of fresh fundamental drivers. There are no data releases from Canada and the only noteworthy data from the U.S. will be the JOLTS job openings, which is expected to ease to 5.960 million from 6.163 million in July. However, this data is unlikely to receive any significant market reactions.

The pair's recovery seems to be a product of the bid tone surrounding the greenback on Tuesday. After recording robust recovery gains on Monday, the US Dollar Index is now looking to extend its upside beyond the 92 mark. As of writing, the index was at 92.02, up 0.11% on the day. However, this move hadn't been backed by any fundamental developments or data, which suggests that it is merely technical and remains fragile.

On the other hand, crude oil prices are struggling to recover last Friday's heavy losses. Although a recent report showed that the global oil supply decreased by 0.41 million barrels per day to average 96.75 million barrels per day in August, the barrel of West Texas Intermediate failed to stage a strong rebound and was last seen trading a little above the $48 mark.

Technical outlook

With today's advance, the RSI indicator on the daily graph inched higher above the 30 mark, suggesting that the pair's oversold conditions are improving and the bearish momentum is fading away. The pair could face the first technical resistance 1.2245 (10-DMA) ahead of 1.2385 (20-DMA) and 1.2490 (Sep. 1 high). On the flip side, supports are located at 1.2120 (Jun. 18, 2015, low) ahead of 1.2080 (Apr. 27, 2015, low) and 1.2000.