USD/CAD struggles to rise above 1.33 as oil rally counters USD strength

•WTI refreshes monthly high above $71.
•US Dollar Index advances to 94.70.
•Trade deficit in the United States shrinks in May.

For the third day in a row, the USD/CAD pair struggles to pull away from the 1.33 handle as the rising crude oil prices help loonie stay resilient against the USD. As of writing, the pair was virtually unchanged on the day at 1.3310.

Earlier today, reports of the U.S. administration taking a step back regarding limitations of investments in the American technology firms brought the risk-appetite back to the markets and helped the greenback gather strength. Moreover, today’s data from the U.S. showed that the international trade deficit decreased to $64.8 billion in May from $67.34 billion in April. Moreover, durable goods orders contracted by 0.6% to come better than the market expectation of -1%. Boosted by the upbeat data and easing trade concerns, the US Dollar Index touched its best level in a week near 94.70.

On the other hand, the commodity-sensitive loonie continues to find demand amid rallying oil prices. Following the reports of the U.S. pushing its allies to stop importing oil from Iran forced investors to start pricing the expectations of a decreased supply toward the end of the year.

As of writing, the barrel of West Texas Intermediate was trading at its highest level since late May at $71.50 and was adding 1.4% on the day. Later in the day, the EIA is going to publish its weekly inventory report. A higher-than-expected draw in crude stocks could help crude oil extend their gains.

Technical outlook

The pair could face the first technical support at 1.3260 (Jun. 22 low) ahead of 1.3200 (psychological level/Jun. 19 low) and 1.3160 (Jun. 18 low). On the upside, resistances align at 1.3330 (Jun. 27/26/25 high), 1.3380 (Jun. 22 high) and 1.3440 (Apr. 5, 2017, high).

USD/CAD struggles to rise