USD/CAD aims to overstep 1.3000 as oil weakens, focus is on Jackson Hole

• USD/CAD is attempting a decisive break above 1.3000 amid weaker oil prices.
• The overall structure of the DXY is bullish ahead of Jackson Hole Economic Symposium.
• Accelerating recession fears in the US economy have weakened oil prices.

The USD/CAD pair has turned sideways after failing to overstep the psychological resistance of 1.3000 in the early European session. The asset is displaying back-and-forth moves in a narrow range of 1.2985-1.2994. An upside bias remains favored as loonie bulls are facing the headwinds of weak oil prices. Also, the overall bullish structure of the US dollar index (DXY) is strengthening the greenback bulls.

Oil prices have surrendered their short-lived pullback towards $89.58 and have resumed their downside run as recession fears are escalating dramatically in the US economy. As per the Reuters poll “Thirty-seven of 48 economists said if the U.S. enters a recession within the next two years, it would be short and shallow. Ten said it would be long and shallow and only one said long and deep.”

Also, growing recession fears are forcing the Federal Reserve (Fed) to slow down the pace of hiking interest rates. It is worth noting that Canada is a leading exporter of oil to the US and plummeting oil prices have a significant impact on loonie bulls.

On the dollar front, the US dollar index (DXY) is aiming to recapture its fresh monthly highs at 108.29. The DXY is likely to remain upbeat despite a slowdown in the pace of hiking interest rates. No doubt, the rate hike pace will slow down due to resurging consequences of extreme shrinkage of liquidity from the US economy. But the plain-vanilla inflation rate is still above 8.5% and is needed to get fixed sooner. Therefore, the Fed will continue its hawkish tone at Jackson Hole Economic Symposium.