USD/CAD finds tough resistance near 1.3600 amid subdued USD Index and oil accelerates

• USD/CAD is facing tough barriers near 1.3600 amid solid oil price and a decline in the USD index.
• The Canadian economy will receive billions of dollars of tax revenue from banks and insurance companies for dividends they get on investments.
• Oil price is expected to remain on tenterhooks ahead of US EIA inventory data.

The USD/CAD pair has sensed stiff barriers near 1.3600 in the Asian session. The downside bias for the Loonie asset seems solid as the US Dollar Index (DXY) looks prone to further losses below 102.40. The USD Index has found intermediate support near 102.40 but is likely to surrender amid improved risk sentiment.

The USD Index is facing immense pressure after easing United States banking jitters. Fears of a US banking crisis have started receding, however, the commentary from US House Speaker Kevin McCarthy in an interview at CNBC on Tuesday that there was no need for blanket insurance on all bank deposits "at this moment in time," as reported by Reuters, could stimulate them again.

S&P500 futures remained mostly restricted on Tuesday after the commentary from US House Speaker Kevin McCarthy. While the overall market sentiment looks cheerful as the Federal Reserve (Fed) is expected to sound steady for its interest rate decision in its next monetary policy meeting in May.

Meanwhile, the appeal for US government bonds remained weak as investors believe that the US will be out of the banking crisis sooner. This led to a further rise in 10-year US Treasury yields to 3.57%.

The Canadian Dollar remained volatile on Tuesday after Finance Minister Chrystia Freeland announced that dividends received by financial institutions from holding domestic shares will be treated as business income, as reported by Bloomberg. This will result in billions of dollars of tax revenue from banks and insurance companies for dividends they get from Canadian firms.

On the oil front, the oil price has accelerated to near $74.00 amid a weaker US Dollar and expectations of more sanctions on Russia. For further guidance, oil inventory data by the US Energy Information Administration (EIA) will be keenly watched. As per the consensus, the US EIA will report a small build-up in oil stockpiles by 0.187 million barrels for the week ending March 24.

It is worth noting that Canada is the leading exporter of oil to the United States and higher oil price would strengthen the Canadian Dollar further.