USD/CAD clings to strong daily gains above 1.2760 as WTI loses more than 7%
- USD/CAD remains on track to gain more than 1% on Monday.
- WTI breaks below $67, loses more than 7%.
- US Dollar Index clings to modest gains, stays below 93.00.
The USD/CAD pair started the new week on a firm footing and rose above 1.2800 for the first time since late January. With the trading action turning subdued in the late American session, the pair seems to have gone into a consolidation phase and was last seen gaining 1.15% on a daily basis at 1.2755.
The sharp decline witnessed in crude oil prices weighed heavily on the commodity-related loonie on Monday. Pressured by the worsening demand outlook amid rising coronavirus delta variant cases and the agreement between Saudi Arabia and the United Arab Emirates to increase the oil output, WTI is down 7.15% at $66.35.
On the other hand, the risk-averse market environment is allowing the safe-haven greenback to outperform its rivals. At the moment, the S&P 500 Index is losing 2.1% on the day at 4,237 and the US Dollar Index is rising 0.16% at 92.86.
USD/CAD outlook
Credit Suisse analysts think that USD/CAD could target 1.3024.
"We would see initial resistance at 1.2751/64, the highs from February, then 1.2881, with the size of the potential base suggesting a move to 1.3024 is possible, the 38.2% retracement of the 2020/2021 fall," analysts said. "Near-term support moves to 1.2608, then 1.2577/72, with 1.2561 ideally holding to keep the immediate risk higher."
Additional levels to watch for