USD/CAD gathers momentum after finding support below 1.32

After renewing its session highs around mid-1.32s, the USD/CAD pair lost momentum and dropped to 1.3190. However, the pair gathered some bullish momentum in the last hour and rose above the 1.32 handle. As of writing, the pair is trading at 1.3220, up 0.08%, or 10 pips, on the day.

Following a bearish opening gap, the US Dollar Index spent a big portion of the day moving sideways below the 97 mark. New York Fed President Dudley's remarks, which supported the FOMC's optimistic view on the economy and the inflation outlook, helped the index gain traction. As the index extended its rise in the NA session, it filled the gap and refreshed its session high at 97.24. At the moment, the index is at that level, up 0.4% on the day.

On the other hand, the barrel of West Texas Intermediate came back under a new selling pressure in the session and broke below the $45 handle, making it difficult for the commodity-linked loonie to preserve its gains against the greenback. The barrel of WTI is now at $44.70, down 0.6% on the day.

Technical outlook

Short-term technical indicators for the pair don't give any clear signals. Both the 10 and 20-hour SMA's are moving sideways around the 1.3220 handle while the RSI on the hourly graph is horizontal near the neutral 50 zone. The initial resistance for the pair could be seen at 1.3300 (psychological level) ahead of 1.3365 (200-DMA) and 1.3400 (psychological level/20-DMA). On the downside, supports are located at 1.3165 (Jun. 14 low), 1.3100 (psychological level) and 1.3010 (Feb. 16 low).

• USD/CAD bearish near term – Scotiabank