USD/CAD stays in the negative territory below 1.2630 as oil rebound continues

• USD/CAD continues to edge lower following Monday's decline.
• US Dollar Index stays flat on the day near 93.00.
• WTI is rising more than 1% after gaining nearly 6% on Monday.

The USD/CAD pair lost more than 150 pips on Monday as the commodity-sensitive loonie capitalized on surging crude oil prices. Although the bearish pressure surrounding the pair seems to have softened on Tuesday, it remains in the negative territory and was last seen losing 0.2% at 1.2620.

Ongoing oil rally supports CAD

The risk-positive market environment provided a boost to oil prices at the start of the week. The barrel of West Texas Intermediate (WTI), which lost more than 8% last week, gained 5.8% on Monday. Ahead of the American Petroleum Institute's Weekly Crude Oil Stock data, the WTI is up 1.6% on the day at $65.65, helping the CAD continue to outperform its rivals.

On the other hand, the US Dollar Index is staying calm near 93.00, allowing the CAD's market valuation to drive USD/CAD's action.

Later in the session, July New Home Sales and the Richmond Fed's Manufacturing Index will be featured in the US economic docket. Meanwhile, the S&P Futures are rising 0.15% ahead of the opening bell, suggesting that the USD could struggle to find demand if risk flows continue to dominate the financial markets in the second half of the day.

Technical levels to watch for