USD/CAD extends four-day downtrend to 1.3650 as US Dollar retreats, Oil price recovers

• USD/CAD renews intraday low during four-day losing streak.
• Cautious optimism in the market, pullback in yields weigh on US Dollar.
• Hopes of more energy demand, no change in OPEC supply cut agreement trigger Oil price rebound.
• US Retail Sales, Canada Housing Starts can direct intraday traders.

USD/CAD holds lower grounds near the one-week bottom, marked the previous day, as it prints mild losses near 1.3670 during a four-day south-run amid early Wednesday in Europe. In doing so, the Loonie pair cheers the broad US Dollar weakness and the latest recovery in Canada’s key export item WTI crude oil.

US Dollar Index (DXY) reverses the previous day’s corrective bounce as it prints 0.16% intraday losses near 103.50 while tracing the latest pullback in the US Treasury bond yields. That said, the US 10-year Treasury bond yields slip to 3.66%, after posting the biggest daily gain in five weeks on Tuesday, whereas the two-year bond coupons struggle to defend the previous day’s recovery from the six-month low near 4.27% at the latest.

On the other hand, WTI crude oil portrays the first daily gain in three while extending the bounce off a three-month low to $72.40 by the press time. While the US Dollar’s weakness could be linked to the black gold’s latest gains, upbeat China Retail Sales and Industrial Production joins the hopes of more energy demand, backed by the OPEC forecasts, keep the energy buyers positive. On the same line, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said that “the OPEC+ alliance will stick to production cuts to the end of 2023.”

While tracing the latest weakness in the yields, downbeat US inflation data and cautious optimism gain major attention. On Tuesday, the US Consumer Price Index (CPI) and CPI ex Food and Energy both matched 6.0% and 5.5% YoY market forecasts, versus 6.4% and 5.6% respective previous readings. “The Federal Reserve is seen raising its benchmark rate a quarter of a percentage point next week and again in May, as a government report showed U.S. inflation remained high in February, and concerns of a long-lasting banking crisis eased,” said Reuters following the US inflation data release.

Elsewhere, policymakers from Japan, Canada and the US have recently ruled out chatters suggesting the grim conditions of their respective banks after the latest fallouts of the Silicon Valley Bank (SVB) and Signature Bank.

While portraying the mood, S&P 500 Future print mild gains by tracing the upbeat performance of Wall Street.

Looking ahead, Canadian Housing Starts for February precede the US Producer Price Index, NY Empire State Manufacturing Index and Retail Sales for February to direct short-term USD/CAD moves. Also important will be the official crude oil inventory from the US Energy Information Administration.

Technical analysis

A daily closing below the one-month-old ascending trend line, now immediate resistance near 1.3735, directs USD/CAD bears toward the 21-DMA support of 1.3615.