USD/CAD eyes 1.2800 as WTI tumbles over 3% amid risk-off mood

• USD/CAD extends a four-day uptrend, as bulls remain unstoppable.
• WTI slides amid covid-led demand concerns, risk-aversion.
• Dollar’s strength on taper talks adds to USD/CAD’s upsurge.

USD/CAD is off the monthly highs but remains strongly bid above 1.2700 amid a sell-off in WTI prices and the relentless rise in the US dollar across the board.

The greenback is trading close to the highest levels in nine months across its main competitors, courtesy of the July Fed meeting’s minutes, which revealed that the US central bank is preparing to scale back its bond-buying programme before the end of this year.

Meanwhile, the Canadian dollar remains undermined by the 4% sell-off in WTI prices amid demand concerns. The rapid spread of the Delta coronavirus cases worldwide alongside fresh lockdowns have reignited the global growth concerns, in turn weighing on the prospects of oil demand.

Looking forward, if the risk-aversion extends into the American session, then the safe-haven dollar could see a fresh leg higher, reviving the buying interest around USD/CAD and driving the rates towards 1.2800.

USD/CAD: Technical outlook

The daily chart shows that an impending bull cross points more gains ahead for USD/CAD. The 21-Daily Moving Average (DMA) is on the verge of cutting the 200-DMA from below, which would confirm the bullish crossover.

The 14-day Relative Strength Index (RSI) points north, well above the midline, suggesting that there is more room to the upside.

The bulls see the next resistance at 1.2807, the July 19 high, if the daily high gives way. Alternatively, daily lows of 1.2641 is the level to beat for the bears.

USD/CAD: Daily chart

USD/CAD: Additional levels