USD/CAD pares intraday losses near 1.2500 as oil retreats towards $85.00

• USD/CAD keeps bounce off daily bottom but stays negative on a day around weekly low.
• Oil prices step back from multi-year high on news that Iraq-Turkey oil pipeline will re-open soon.
• Market sentiment dwindles with yields trimming early Asian gains but the stock futures keep the red.

USD/CAD dribbles around 1.2500, down 0.12% intraday heading into Wednesday’s European session.

The loonie pair dropped to the weekly bottom surrounding 1.2485 earlier in Asia before the latest rebound to 1.2512. Even so, the pair remains negative for the third consecutive day amid mixed concerns.

The quote’s latest weakness could be linked to the pullback in Canada’s main export item, WTI crude oil. The oil benchmark refreshed an eight-year high earlier in Asia on news of a pipeline explosion, as well as Russia-Ukraine tussles. However, the latest comment from the Turkish officials, stating that the oil pipeline will reopen in an hour, is likely to have triggered the black gold’s pullback to $85.26.

Elsewhere, the US 10-year Treasury yields also retreat from a two-year high of 1.89%, flashed earlier in the day, to 1.87% at the latest, which in turn add to the US dollar’s pullback from the weekly high. Though, the stock futures in the US and Europe remain negative and probe the greenback bears.

That said, USD/CAD pair traders will keep their eyes on the US Housing Starts and Building Permits for December for immediate direction ahead of the BOC Consumer Price Index (CPI) data.

Given the escalating odds of the BOC’s rate hike, firmer prints of the Canadian inflation data will exert additional downside pressure on the USD/CAD prices. However, oil prices and Treasury yields are also important catalysts to watch for clear direction.

Read: Yields and oil continue to move higher hurting equities

Technical analysis

USD/CAD bears need to conquer the 200-DMA and an upward sloping support line from June, close to 1.2500 and 1.2460 in that order to excel. On the contrary, the 100-DMA and a monthly resistance line restrict the short-term upside of the USD/CAD prices respectively around 1.2620 and 1.2635. Overall, sluggish oscillators and failures to rebound keep the pair sellers hopeful.