USD/CAD probes three-day losing streak to stay above 1.3500, Canadian CPI eyed

• USD/CAD trims the late-US session gains while easing from 1.3623.
• Risk reset, oil price weakness seems to drive the latest moves.
• Virus updates, US-China news and Canadian data to offer near-term trade direction.

Despite recently declining to 1.3540, USD/CAD prints no major price change during Wednesday’s Asian session. However, the pair sellers do catch a breath after three consecutive days of fall. The changes in the market’s trading sentiment and WTI’s downbeat performance could be traced for the quote’s near-term strength. Though, cautious mood ahead of Canada’s May month inflation numbers seems to confuse the traders.

Escalating fears of the second wave of the coronavirus (COVID-19) sours the market’s earlier optimism. Beijing tightens the lockdown conditions amid increasing pandemic numbers whereas figures from Japan and some parts of the US have also been flashing earlier signals of the pandemic’s resurgence. Additionally, the US Secretary of State Mike Pompeo’s tweet criticizing Iran, as well as his rush to meet Chinese diplomats in Hawaii, also probe the risk-takers.

Amid all these catalysts, the US 10-year Treasury yields struggle to extend the previous two-day rise beyond 0.75% whereas Japan’s Nikkei 225 flash mild losses by the press time.

Elsewhere, WTI bears the burden of downbeat stockpile figures from the American Petroleum Institute (API) while the US dollar’s recovery on Tuesday also adds burden onto the commodity prices. It should be noted that the WTI benchmark on NYMEX currently losses 0.30% to trade around $38.10 and snap the previous three-day winning streak.

Although risk catalysts are likely to remain on the driver’s seat, Canadian Consumer Price Index (CPI) data for May and the second round of Federal Reserve Chairman Jerome Powell’s testimony could entertain the pair traders. The Fed Chair is less likely to deviate from his recently cautious statements but upbeat forecasts concerning the Canadian data might challenge the pair’s latest recovery.

Technical analysis

The 200-day SMA, around 1.3470 now, offers immediate support to the pair during further downside ahead of the monthly low near 1.3315. On the contrary, 1.3645 level comprising 21-day SMA restricts the pair’s immediate advances.