USD/CAD struggles to stay above 1.27 as WTI pushes above $49

The USD/CAD pair gathered momentum in the early NA session and rose to 1.2715 as the US Dollar Index refreshed its session high at 93.40. However, the pair struggled to push higher as rising crude oil prices helped the loonie retrace its losses against the greenback. As of writing, the pair is trading at 1.2695, adding 0.12%, or 15 pips, on the day.

The pair's upsurge seems to be fueled by the greenback strength on Monday. With an empty economic calendar, the DXY started the week correcting last week's losses. Moreover, with an improved risk sentiment, Treasury yields in the U.S. are rising sharply, providing an additional boost to the greenback. At the moment, the US Dollar Index is at 93.30, gaining 0.33% on the day while the 10-year T-bond yield is up 1.2% at 2.212%.

• US Dollar keeps highs near 93.40

However, the fact that crude oil prices are also recovering last week's losses is helping the commodity-sensitive loonie remain resilient. At the moment, the barrel of West Texas Intermediate is trading at $49.09, earning 30 cents on the day.

Despite today's fluctuations, the pair is struggling to find its next short-term direction as the rising OPEC output continues to cap the gains in crude oil prices while the US Dollar's price actions fail to go beyond technical corrections.

• OPEC data is said to show compliance with cuts at 87% in July - Livesquawk

Technical outlook

The pair might need to make a daily close above 1.2700 (psychological level/Jul. 17 high) to extend its gains towards 1.2750 (Aug. 11 high) and 1.2800 (psychological level). On the downside, supports could be seen at 1.2665 (10-DMA), 1.2555 (Aug. 4 low) and 1.2500 (psychological level). The RSI indicator on the daily graph is moving sideways near the 50 handle, supporting the view of a neutral outlook in the near-term.