USD / CAD falls to multi-year lows near 1.2330 amid oil rally and USD weakness

• USD / CAD fell sharply during the US session on Wednesday.
• WTI rose above $ 64 after the weekly EIA report.
• The US Dollar Index remains in negative territory below 91.00 ahead of the FOMC announcements.

The pair USD / CAD it spent the first half fluctuating in a relatively tight range around 1.2400, but was under heavy downward pressure during US business hours. At time of writing, the pair, which hit its lowest level since February 2018 at 1.2328, is trading at 1.2339, losing 0.45% on the day.

CAD capitalizes on bullish data and rising oil prices

The sharp rebound in crude oil prices gave a boost to the commodity-sensitive Canadian dollar on Wednesday. After the weekly report released by the Energy Information Administration (EIA) revealed that crude oil inventories in the US continued to rise, a barrel of West Texas Intermediate (WTI) advanced to a new five-week high from $ 64.49. At the moment, WTI is up 1.7% on the day at $ 64.05.

Meanwhile, data released by Statistics Canada revealed that February retail sales rose 4.8% after January’s 1.1% contraction. This reading was stronger than the market expectation of 4% and helped the CAD outperform its rivals.

On the other hand, the US Dollar Index (DXY) lost its traction ahead of the FOMC policy announcements and allowed the USD / CAD to extend its daily decline. Currently, the DXY is posting small daily losses at 90.88. Although the FOMC is not expected to make any changes to its policy settings, investors will closely monitor President Jerome Powell’s comments regarding the economic outlook and look for clues as to when to downsize.

Technical levels