- WTI erases more than 1% on Monday to weigh on the CAD.
- US Dollar Index edges lower toward the 98 handle after last week's rally.
- The pair is likely to remain stuck in its daily range in the remainder of the session.
The USD/CAD pair posted weekly gains for the second straight time last week but seems to be having a difficult time setting its next short-term direction on Monday as it continues to move sideways near the 1.3230 mark.
Oil rally loses steam on Monday
The broad-based USD strength last week fueled the pair's rally. However, rising crude oil prices limited the pair's gains by boosting the demand for the commodity-related CAD. Heightened hopes of the OPEC+ introducing additional oil output cuts and the United States and China soon finalizing the phase-one of the trade deal last week allowed the barrel of West Texas Intermediate (WTI) to add 2.3%. At the start of the week, the WTI is staging a deep recovery, losing more than 1% on a daily basis.
Earlier in the session, Reuters reported that Saudi Arabia's oil production in October at 10.3 million barrels per day was in conformity with the OPEC+ output cut agreement but failed to help oil rebound.
On the other hand, the US Dollar Index, which capitalized on surging US treasury bond yield and the selling pressure surrounding the major European currencies last week, reversed its direction and now edges lower toward the 98 mark on Monday, allowing the pair to remain in its daily range despite the crude oil selloff.
With the US and Canada markets both staying closed on Monday, the pair is likely to extend its consolidation and stay directionless. In the second half of the week, investors will be paying close attention to Federal Open Market Committee Chairman Jerome Powell's two-day testimony.
Technical levels to watch for
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