USD/CAD continues to push lower toward 1.4000 on oil rally
- USD/CAD trades in the negative territory despite broad USD strength.
- CAD gathers strength as US crude oil gains more than 12%.
- US Dollar Index clings to daily gains after PMI data.
After rising toward the 1.4100 handle earlier in the day, the USD/CAD pair reversed its course as rising crude oil prices helped the commodity-sensitive CAD outperform its rivals. As of writing, the pair was down 0.4% on a daily basis at 1.4030.
Heightened hopes of global energy demand recovering in the second half of the year amid easing coronavirus-related restrictions continue to fuel crude oil's rally on Tuesday. The barrel of West Texas Intermediate, which gained more than 19% on Monday, was last up 12% on the day at $26.35.
DXY inches closer to 100
On the other hand, the selling pressure surrounding the major European currencies on Tuesday helped the greenback find demand and limited the USD/CAD pair's losses. The US Dollar Index (DXY) now looks to close second straight day with gains.
The data published by the ISM revealed that the economic activity in the US' service sector contracted at a softer pace than expected. In the meantime, the US Census Bureau's monthly report showed that the US' trade deficit widened to $44.4 billion in March from $39.8 billion in February. Nevertheless, the market reaction to these data was relatively muted.
On Wednesday, the ADP's private sector employment report and the Energy Information Administration's (EIA) Crude Oil Stocks Change data will be looked upon for fresh impetus.
Technical levels to watch for