USD/CAD rebounds above 1.32 on oil sell-off, FOMC on sight

After refreshing its lowest level since late February at 1.3165 at the beginning of the NA session, the USD/CAD started to retrace its losses amid falling crude oil prices and rose back above the 1.32 handle. As of writing, the pair was trading at 1.3210, losing 0.25% on the day.

Earlier in the session, the disappointing inflation and retail sales numbers from the U.S. triggered a USD sell-off, dragging the US Dollar Index to its lowest in eight months at 96.30. Following the initial fall, the index went into a consolidation phase as investors gear up for the FOMC meeting. At the moment, the index is at 96.45, down 0.54% on the day.

• When is the Fed interest rate decision and how could affect DXY?

On the other hand, the commodity-linked loonie failed to gather strength against the greenback as the barrel of West Texas Intermediate slipped to its lowest price in more than a month at $44.55. Despite a 1.7 million decrease in the U.S. crude oil stocks, the EIA reported that the production rose 0.12% to 2.096 million barrels in the U.S., weighing on prices. In the meantime, a major fire broke out at a Mexican oil refinery, which has a capacity of 330,000 barrels per day, possibly limiting the losses for the time being. 

• EIA: U.S. commercial crude oil inventories decreased by 1.7 mln barrels
• Fire breaks out at Pemex's Salina Cruz refinery, no injures - Reuters

Technical outlook

Despite the recent rebound, the RSI on the daily graph continues to show oversold conditions, suggesting that the selling pressure is likely to ease ahead of another sell-off. 1.3165 (daily low), could be seen as the first support ahead of 1.3100 (psychological level) and 1.3010 (Feb. 16 low). On the upside, with a clean break above  1.3300 (psychological level), the pair's recovery could extend towards 1.3365 (200-DMA) and 1.3415 (10-DMA).