USD/CAD stays below 1.3400 despite broad USD strength
- USD/CAD is fluctuating in a tight range below 1.3400 on Monday.
- Rising crude oil prices help CAD stay resilient against its rivals.
- US Dollar Index builds on Friday's strong gains.
The USD/CAD pair posted daily gains on Thursday and Friday to close the week virtually unchanged. However, with rising crude oil prices helping the commodity-related loonie stay resilient against its rivals, the pair edged lower on Monday and was last seen losing 0.1% on the day at 1.3371.
In the absence of significant fundamental drivers, risk-sensitive crude oil is capitalizing on the upbeat market mood. As of writing, the barrel of West Texas Intermediate (WTI) was up 0.5% on a daily basis at $41.75.
On the other hand, the US Dollar Index (DXY), which snapped a three-day losing streak on the back of upbeat labour market data on Friday, is stretching higher on Monday, keeping USD/CAD's downside limited for the time being. Ahead of the US Bureau of Labor Statistics' JOLTS Job Openings report, the DXY is up 0.12% on the day at 93.50.
There won't be any significant macroeconomic data releases featured in the Canadian economic docket on Monday and USD/CAD is likely to extend its sideways grind unless there is a major shift in crude oil's price action.
Later in the week, Housing Starts and Manufacturing Sales data from Canada will be looked upon for fresh impetus.
USD/CAD outlook
Analysts at Credit Suisse think that USD/CAD struggle to rise above 1.3418/21 area, where the downtrend from March, 21-day exponential average and 38.2% retracement of the June/August fall at 1.3418/21 are located.
“Above 1.3421 though would see the downtrend break to increase the threat of a small base, although this would only be confirmed above 1.3460, with resistance next at 1.3486/91," analysts add. “Support is seen at 1.3368 initially, then 1.3285/67, below which should see bearish pressure resume with support then seen next at 1.3233 and then more importantly at 1.3206/1.3191.”
Additional technical levels to watch for