USD/CAD inches higher toward 1.33 on oil sell-off

After spending the majority of the day moving sideways in a tight range above the 1.32 handle, the USD/CAD gathered some bullish momentum as the oil sell-off hurt the demand for the commodity-linked loonie. As of writing, the pair is trading at 1.3280, up 0.45% on the day.

Earlier today, a report by Reuters revived the oversupply glut concerns after it revealed that Libya's oil production reached the highest level of the year at 885,000 barrels per day and the country aims to increase production to 1 million barrels per day by the end of next month. Moreover, Russian Energy Minister Novak said that Russia had no plans to meet U.S. shale oil producers to discuss the market situation. As of writing, the barrel of West Texas Intermediate is testing the $43 handle, losing nearly 3% on the day. 

Today's data from Canada, which showed that the Wholesale Sales eased to 1% in April from 1.2% in March but still came above the market consensus of 0.5%, couldn't help the loonie stay resilient against the USD.

• Canada: Wholesale sales increased 1.0% to $61.0 billion in April

On the other hand, the greenback remains well bid against its major rivals on Tuesday, pushing the US Dollar Index to a fresh session high 97.42 in the NA session. Although the 10-year U.S. T-bond yield is correcting yesterday's gains, hawkish comments continue to keep the demand for the USD alive. 

Technical outlook

With today's upsurge, the RSI on the daily graph started to move away from the oversold area, suggesting that an upward correction is now underway. However, the pair needs to make a decisive break above 1.3300 (psychological level) to extend its correction toward 1.3365 (200-DMA) and 1.3400/1.3390 (psychological level/20-DMA). On the downside, supports could be seen at 1.3165 (Jun. 14 low), 1.3100 (psychological level) and 1.3010 (Feb. 16 low).