USD/CAD steadies near 1.3450 on softer US Dollar, upbeat Oil price ahead of Canada inflation, US Retail Sales

• USD/CAD remains sidelined after poking monthly high the previous day, pares intraday losses of late.
• Downbeat US inflation expectations, cautious optimism joins consolidation ahead of key data/events to weigh on US Dollar.
• WTI crude oil cheers softer US Dollar, hopes of China stimulus and PBoC rate cut to recover.
• US Retail Sales, Canada inflation clues will join risk catalysts to entertain intraday traders of Loonie pair.

USD/CAD clings to mild losses near 1.3450 as it seesaws at the weekly top marked the previous day amid early Tuesday morning in Europe. In doing so, the Loonie pair aptly portrays the cautious mood ahead of the top-tier statistics from the US and Canada.

It’s worth noting that the recent retreat of the US Dollar Index (DXY) contrasts with a pick-up in the WTI crude oil price, Canada’s main export item, to challenge the pair’s upside amid mixed clues.

Having refreshed a five-week high the previous day, the DXY prints the first daily loss in four around 103.05 by the press time, after witnessing downbeat inflation clues. That said, the New York Fed’s one-year inflation expectations eased to 3.5% for July, down three points by falling to the lowest level since April 2021. New York Fed survey, however, also suggested confidence in positive labor market conditions and economic transition.

On the other hand, the WTI crude oil rises 0.40% intraday to $83.25 as it reverses the previous day’s fall to a one-week low. While the US Dollar’s pullback and the market’s cautious optimism can be cited as the key catalysts for the Oil Price rebound, the People’s Bank of China’s (PBoC) surprise rate cuts and readiness for further stimulus adds strength to the black gold’s corrective bounce as Beijing is one of the world’s biggest crude oil customer.

It should be noted that sluggish US Treasury bond yields, after refreshing the yearly top, also prods the USD/CAD buyers. That said, the US 10-year Treasury bond yields seesaw at the highest level since November 2022, marked the previous day, making rounds to 4.20% by the press time. While portraying the mood, stock futures of the US and Europe remain mildly positive and prod the DXY bulls.

Moving forward, the US Retail Sales for July, expected 0.4% MoM versus 0.2% prior, will be important to watch for immediate directions. Also important will be Canada’s Consumer Price Index (CPI) for July and the Bank of Canada (BoC) CPI Core for the said month, not to forget the risk catalysts and the energy market updates.

Technical analysis

A five-month-old descending resistance line joins the overbought RSI (14) to challenge the USD/CAD buyers around 1.3465-70.