USD/CAD jumps above 1.3000 as oil prices plunge

• USD/CAD gathered bullish momentum and climbed above 1.3000 on Tuesday.
• Crude oil prices are down more than 6% amid the worsening demand outlook.
• The dollar benefits from risk-aversion, fueling the pair's rally.

The USD/CAD pair advanced beyond 1.3000 and touched its strongest level in two weeks. The broad-based dollar strength and falling crude oil prices allow the pair to preserve its bullish momentum during the American trading hours.

Falling oil prices hurt CAD

Investors grow increasingly concerned over a global recession and the energy demand outlook. The barrel of West Texas Intermediate (WTI) was last seen losing 6.6% on the day at $103.20, weighing in on the commodity-sensitive CAD.

While speaking at an energy conference in Nigeria, "the ongoing war in Ukraine, a COVID-19 pandemic which is still with us, and the inflationary pressures across the globe have come together in a perfect storm that is causing significant volatility and uncertainty in the commodity markets in general," OPEC Secretary-General Mohammad Barkindo said on Tuesday.

On the other hand, the intense flight to safety is helping greenback outperform its rivals. Following Monday's choppy action, the US Dollar Index turned north on Tuesday and was last seen sitting at its highest level in nearly two decades at 106.50, rising 1.3% on a daily basis. Reflecting the souring market mood, major equity indexes in the US are down between 1.5% and 2%.

In the meantime, the data from the US revealed that Factory Orders rose by 1.6% in May, surpassing the market expectation for an increase of 0.5%.

Technical levels to watch for