USD/USD is struggling to extend gains above 1-hr 50-MA

USD/CAD is struggling to hold above the 1-hour 50-MA level of 1.2139 as oil prices edged up on talks of an extension of the oil output cut deal. 

The currency pair clocked a low of 1.2061 on Friday, before clocking a high of 1.2162 levels in Asia. USD/CAD dropped 1.91% last week, courtesy of the BOC surprise 25 basis point rate hike and the broad based USD sell-off. 

CAD tracks Oil

Oil is trading on the front foot after the Saudi oil minister discussed the possibility of extending a pact to cut global oil supplies beyond March 2018. The news of the talks on Sunday helped overshadow the fears of a sharp drop in oil demand due to Hurricane Irma.

The CAD is tracking the oil prices higher. Moreover, the greenback is  trading higher against most other currencies, given the North Korea inaction forced investors to square off the safe haven longs & USD shorts initiated on Friday. 

Attentions today will likely remain on oil prices as the domestic macroeconomic docket offers little to spark direction. 

USD/CAD Outlook

Eric Theoret, FX Strategist at Scoatiabank, sees the pair grinding lower towards the 1.20 area by year-end.

"Both trend and momentum indicators are decidedly bearish and the RSI is in oversold territory. USDCAD appears set to test the midpoint of the range from 2011. There are no major support levels ahead of 1.20 and the 2015 low at 1.1920. A break would open up the risk of a push to 1.1620. Near-term resistance has been observed around 1.2120”.