USD/CAD sticks to daily gains, remains below 1.25

• USD/CAD trades in a 40-pip range on Tuesday.
• DXY struggles to gain traction.
• WTI continues to consolidate below $64.

After finishing the first trading day of the week with a 30-pip loss, the USD/CAD pair staged a modest recovery on Tuesday but lost its momentum before testing the critical 1.25 handle. As of writing, the pair was trading at 1.2477, up 0.25% on the day.

Despite the fact that the U.S. government reopened following a three-day-long shutdown, the greenback failed to attract demand from investors with the US Dollar Index extending its subdued action below the mid-90s. At the moment, the index is up only 0.08% on the day at 90.22. The only data scheduled to be released from the U.S. will be the Richmond Fed Manufacturing Index at 15 GMT, which is unlikely to have a significant impact on the DXY's fluctuations.

On the other hand, the barrel of West Texas Intermediate remains directionless below the $64 handle, not providing a catalyst for the commodity-linked loonie. Later in the session, the API is going to release it weekly crude oil stock report. A larger-than-expected draw in crude stocks could help the WTI push above $64 and allow the CAD to start gathering strength.

Technical outlook

The initial support for the pair aligns at 1.2405/00 (Jan. 15 low/psychological level) followed by 1.2355 (Jan. 5 low) and 1.2255 (Sep. 22 low). On the upside, resistances could be seen at 1.2500 (psychological level), 1.2580 (Jan. 10 high) and 1.2650 (100-DMA/50-DMA).