USD/CAD surges to 1.3050 as oil erase early gains

The US Dollar bid tone seems to have gained further traction during early European session, with the USD/CAD pair witnessing a bullish spike to 1.3050 level. 

The greenback continued with its strong bullish run after Tuesday housing market data out from the US now seems to have revived expectations of an imminent Fed rate-hike later during this year. 

The Canadian Dollar has also failed to benefit from an early recovery in oil prices after API report showed a 2.3 million-barrel decrease in US crude supplies. However, investors remained skeptic of any further recovery in crude oil prices on concerns over elevated stocks of fuel products amid slowing demand growth.

With an empty US economic docket, traders will be watching the official release of weekly US crude inventories report by the Energy Information Administration later during NY trading session. Any disappointment from today's data might keep oil prices under pressure and would weight on commodity-linked currency, Loonie.

Technical levels to watch

On a sustained strength above 1.3050, the pair seems set to extend its upward trajectory towards 1.3130-40 resistance area (July 11-12 highs), above which the bullish momentum seems to lift the pair towards May high resistance near 1.3200 round figure mark.

Meanwhile on the downside, 1.3000 psychological mark now seems to act as immediate support. Weakness below this immediate support is likely to get bought into and hence might limit any further downside at an important moving averages confluence area near 1.2960-50 region (comprising of 100-day and 50-day SMAs).