USD/CAD prods monthly top near 1.3650 amid sluggish Oil price, US Dollar retreat ahead of key data

• USD/CAD seesaws at the highest level in a month amid three-day winning streak.
• Risk-off mood weighs on Oil price, allows US Dollar to remain firmer despite latest pullback.
• Upbeat US data, looming concerns about US default keeps Loonie traders on their toes.
• US Durable Goods Orders, Fed’s preferred inflation gauge eyed for clear directions.

USD/CAD bulls take a breather after refreshing the monthly high, retreating to 1.3645 during the mid-Asian session on Friday. In doing so, the Loonie pair takes clues from the latest retreat in the US Dollar price while also justifying the downbeat Oil prices and sour sentiment.

While the US Dollar’s pullback could be linked to a cautious mood ahead of the key data, fears surrounding the US default and upbeat US Q1 GDP, as well as other activity numbers, keep the Loonie pair buyers hopeful. Additionally, mixed feeling about the Oil price adds trading filters to the USD/CAD price.

That said, the US Dollar Index (DXY) retreated from the highest levels since March 13 to 104.17 by the press time as traders await the US Durable Goods Orders for April and the Core Personal Consumption Expenditure (PCE) Price Index for the said month, known as the Fed’s preferred inflation gauge.

On Thursday, the second estimation of the US Annualized Gross Domestic Product (GDP) for Q1 2023 was revised up to 1.3% versus 1.0% first forecasts. Further, the Chicago Fed National Activity Index for April improved to 0.07 from -0.37 prior and -0.02 market estimations. On the same line, Kansad Fed Manufacturing Activity improved to -2 for May compared to -21 previous readings and analysts’ estimations of -11. It’s worth noting that the US Pending Home Sales for April improved on YoY but eased on MoM whereas Core Personal Consumption Expenditures also rose to 5.0% during the preliminary readings versus 4.9% prior.

However, hawkish Fed bets and the US debt ceiling expiration concerns allow the US Dollar to dominate. Recently, US House Speaker Kevin McCarthy announced no agreement on the debt deal, as well as the continuation of talks by saying, “It’s hard. But we’re working and we’re going to continue to work until we get this done.”

On the other hand, WTI crude oil remains indecisive around $71.85 as it struggles to cheer the US Dollar’s retreat amid hopes of witnessing the $80.00 price, suggested by Russian Deputy Prime Minister Alexander Novak on Thursday.

While portraying the mood, S&P500 Futures print mild losses while the Yields grind higher amid the market’s indecision, which in turn prod the USD/CAD bulls ahead of the key US data and looming debt payment default.

Technical analysis

USD/CAD bulls need validation from the previous monthly high of around 1.3665-70 to keep the reins. That said, the overbought RSI conditions suggest a pullback towards the previous resistance line stretched from March, around 1.3540 at the latest.