USD/CAD retreats to 1.2450 area as WTI turns positive on the day

• USD/CAD stays under modest bearish pressure on Tuesday.
• US Dollar Index continues to move sideways above 94.00.
• WTI holds above $80 after climbing to multi-year highs on Monday.

The USD/CAD pair spent the Asian session fluctuating in a tight range but started to edge lower ahead of the American session with the commodity-sensitive loonie gathering strength on rising crude oil prices.

Oil weakness remains short-lived

Supported by reports suggesting that OPEC+ is not looking to increase its output despite rising energy prices, the barrel of West Texas Intermediate reached its highest level in nearly seven years at $82.15 on Monday. Although WTI staged a correction and briefly dipped below $80 on Tuesday, it's currently up 0.5% on the day at $80.85.

On the other hand, the negative shift witnessed in risk sentiment helped the greenback gather strength in the late American session on Monday and allowed USD/CAD to limit its losses. The US Dollar Index, which reached a six-day high of 94.43 earlier in the day, is now flat around 94.30.

There won't be any high-tier macroeconomic data releases in the remainder of the day and the risk perception is likely to continue to impact the USD's market valuation. Currently, US stock index futures are little changed on a daily basis.

The Consumer Price Index (CPI) data from the US on Wednesday will be the next significant data that could ramp up the market volatility.

Technical levels to watch for