USD/CAD continues to fluctuate in tight range below 1.3200

• USD/CAD is struggling to find direction on Monday.
• US Dollar Index dropped below 93.00 as Wall Street rallies.
• WTI pared early losses and turned flat above $37 in early American session.

The USD/CAD pair rose toward 1.3200 during the European trading hours on falling crude oil prices but reversed its direction and turned flat on the day near 1.3170.

Earlier in the day, the OPEC in its monthly report noted that the world oil demand in 2020 was expected to decline by 9.46 million barrels per day (bpd), compared to 9.06 million bpd in the previous report. Pressured by this report, the barrel of West Texas Intermediate (WTI) slumped to a daily low of $36.80 and weighed on the commodity-related loonie.

However, the upbeat market mood, as reflected by sharp upsurge witnessed in Wall Street's main indexes, helped crude oil stage a rebound. At the moment, the S&P 500 Index is up 1.7% on the day and the WTI is flat near $37.30.

On the other hand, the greenback is struggling to attract investors as a safe-haven in the risk-on market environment. The US Dollar Index is down 0.32% on the day at 92.96. 

USD/CAD outlook

OCBC Bank analyst Terence Wu thinks that USD/CAD is likely to trade in the 1.3100-1.3250 range in the near term.

"Soft crude and commodity complex should continue to keep the USD/CAD buoyant for now, although the soggy USD will put a lid on any significant attempts to lift-off," Wu said. “Suspect that there is not much official appreciation for a lower USD/CAD at this point.” 

Key technical levels to watch for

USD/CAD