USD/CAD retreats towards 1.3000 amid market’s consolidation, oil’s bounce ahead of Fed Minutes

• USD/CAD steps back from two-month-old resistance after rising to the highest levels since November 2020.
• Markets remain mixed after a wild day that propelled US dollar amid recession woes.
• ISM Services PMI, risk catalysts will join the FOMC Minutes to direct immediate moves.

USD/CAD bulls take a breather at the highest levels in 20 months, retreating towards 1.3000 during Wednesday’s Asian session, as markets consolidate the latest moves ahead of the key data/events.

The Loonie pair refreshed a multi-day high while rising the most since August 2021 as recession woes underpinned the US dollar’s rally to a two-decade high. Also fueling the USD/CAD prices was a downbeat performance of Canada’s biggest export item, namely WTI crude oil.

That said, the US Dollar Index (DXY) rallied to the highest levels in 20 years as the US traders returned from the long weekend, which in turn drowned the Gold Price. In addition to the rush for risk safety, the DXY also benefited from the better-than-forecast US Factory Orders for May, to 1.6% MoM versus 0.5% expected and upwardly revised 0.7% previous readings.

On the other hand, WTI crude oil picks up bids to $99.20 as it pares the biggest daily loss since March, around a three-month low.

Growing fears of global recession joined speculations that China may recall covid-led lockdowns to weigh on the gold prices the previous day. The pessimism intensified after Germany and Italy flashed economic warnings while the Bank of England (BOE) also released a report conveying the grim economic outlook.

While portraying the mood, Wall Street closed mixed and the S&P 500 Futures print mild gains while the US Treasury yields remain pressured near a one-month low.

To sum up, USD/CAD remains on the front foot amid recession fears but the Federal Open Market Committee (FOMC) Minutes and the US ISM Services PMI for June will be important to watch for fresh impulse.

Technical analysis

A clear upside break of an ascending resistance line from May, near 1.3085, appears necessary for the USD/CAD bulls to keep reins. Until then, overbought RSI conditions, on the daily chart, hint at the pair’s pullback towards revisiting the 50-DMA support around 1.2840