USD/CAD looks to recapture 1.3050 as oil eases and DXY strengthens

• USD/CAD sees an upside to near 1.0305 as oil slumps on renewed demand worries.
• The DXY has climbed above 104.00 as investors underpin firmer US inflation.
• Investors should brace for a bullish double-distribution day.

The USD/CAD pair has given an upside break of the intraday consolidation formed in a narrow range of 1.2977-1.3008. The asset is expected to display a bullish Double Distribution day in which the asset moves higher after a balanced profile at the open and forms a distribution again at higher levels. The greenback bulls are aiming to recapture yearly highs at 1.3052.

It would be justified to claim that the US dollar index (DXY) is ruling the FX domain backed by a higher US Consumer Price Index (CPI) and its safe-haven appeal. In the early European session, the DXY has reclaimed its previous day’s high at 104.11 and is expected to extend gains after its decisive violation. The asset is trading long in a consolidation range of 103.38-104.20.

Higher US CPI has strengthened the chances of a continuous jumbo rate hike by the Federal Reserve (Fed). The yearly US CPI figure has landed at 8.3%, a little lower than the former figure of 8.5%, which is showing some signs of a flattening inflation curve. One should keep in mind that the chances of a recession in the US economy are yet not over.

On the oil front, a bearish reversal has been observed in the Asian session as the asset is falling sharply lower after a sheer upside move on Wednesday. The oil prices are expected to slip further to near the psychological support of $100.00 as higher US inflation figures have triggered the alarms of an extremely tightening policy by the Fed. Heavy liquidity contraction will dampen the growth forecasts and henceforth the demand for oil. It is worth noting that Canada is the leading exporter of oil to the US and slippage in oil prices is weakening loonie against the greenback.