USD/CAD eyes three month high at 1.2960 despite firmer oil prices and improved risk appetite

• USD/CAD has surpassed 1.2877 despite rising oil prices and return of risk-on impulse.
• Zelenskyy’s withdrawal of NATO membership has raised the odds of a ceasefire.
• The DXY promises a wide range consolidation ahead of the US inflation print.

The USD/CAD pair has violated February 24 high at 1.2877 decisively and is looking forward to reclaiming the three-month high at 1.2960. It is very much suspicious that a rally has been witnessed in the counter despite boiling oil prices and an improvement in the risk appetite of investors.

The confirmation from Ukraine President Volodymyr Zelenskyy on withdrawing the application of NATO’s membership has fulfilled Russia’s pre-invasion demand. Moreover, the former is ready to ‘compromise’ on ‘independent’ recognized territories by Moscow. This has increased the odds of a ceasefire between the counterparts and demand for risk-perceived assets seems to have returned to the table.

Meanwhile, the US is determined to bring carnage to the Russian economy. The former has enrolled in a unilateral banning of Russian oil for imports in its economy. This has sent the oil prices near $125.00. Canada, being the largest exporter of oil to the US has failed to capitalize on boiling oil prices and return of risk-on impulse.

The US dollar index (DXY) is promising a wide-range consolidation ahead of US Consumer Price Index (CPI) numbers on Thursday. The coming US CPI numbers hold significant importance as they may have a major impact on the dictation of March’s monetary policy meeting by the Federal Reserve (Fed).

Additionally, US Energy Information Administration (EIA) will report weekly crude oil stockpiles on Wednesday, which will have a major impact on oil prices. The oil stockpiles are likely to land at -0.833 million barrels higher than the prior print of -2.597 million barrels.