- USD / CAD resumes its decline as the WTI rally offsets the USD rebound.
- Cautious sentiment amid inflation concerns fuels the USD.
- The focus shifts to Canadian retail sales and Fed speeches for fresh momentum.
The pair USD / CAD is breaking down its consolidation mode at the start of the European session on Friday, falling below the 1.2600 level.
The pair seeks extend its corrective pullback from six-week highs of 1.2648 ahead of the release of Canadian retail sales data. Stronger-than-expected data is likely to intensify inflation concerns, which in turn will bolster expectations of a Bank of Canada (BOC) rate hike.
The currency pair is trapped in a tight range, as The bulls continue to find support from the rebound in the US dollar across the board. Meanwhile, WTI price recovery spike benefits CAD and it keeps the downward pressure on the pair intact.
WTI is rebounding after the recent drop to multi-week lows following news that it is likely to The United States releases oil supplies from its Strategic Petroleum Reserve (SPR) to ease supply contraction and take advantage of rising prices.
However, the US dollar bulls are returning to the markets after a two-day slide, which may offset the rally led by the WTI rally in the loonie.
Looking ahead, inflation risks and speculation around the Fed will continue to play a key role in boosting market sentiment, eventually hitting the USD / CAD pair.
USD / CAD technical levels
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