USD/CAD finds resistance near 1.3080 amid modest rebound in crude oil

• WTI rebounds above $58, hopes to snap seven-day losing streak.
• US Dollar Index continues to fluctuate below 97.50.
• Annual core CPI in US is expected to stay unchanged at 2.3%.

After spending the Asian session moving sideways in a tight range near 1.3050, the USD/CAD pair gained traction during the European trading hours and advanced to its highest level in five days at 1.3080. However, with recovering crude oil prices helping the commodity-sensitive loonie show resilience against the greenback, the pair retreated to 1.3070 area, where it was still up 0.1% on the day.

Crude oil rebound helps CAD find demand

The de-escalation of the US-Iran conflict and hopes of a ceasefire in Libya weighed on crude oil prices. The barrel of West Texas Intermediate (WTI) registered losses in the past seven trading days and touched its lowest level in more than a month at $57.70. Ahead of the American Petroleum Institue's weekly crude oil stock report, the WTI is up 0.5% on the day at $58.35.

On the other hand, the US Dollar Index is fluctuating in a tight range below the 97.50 mark for the second straight day to allow the pair to retreat from its highs. Later in the day, the Consumer Price Index (CPI) data from the US will be looked upon for fresh impetus.

Previewing the data, “US CPI inflation is expected to accelerate to 2.4% y/y in December from 2.1%, but this is unlikely to change the predominant view in the market that the Fed will keep rates unchanged as the risk of a substantial increase in inflationary pressure is relatively low,” said Rabobank analysts.

Technical levels to watch for