• The Loonie advances 0.12% versus the greenback amid a risk-on market mood.
• Rising crude oil prices underpin the Canadian dollar, the US dollar weakens.
• Canadian Retail Sales rose by 1.6%, more than the 1.0% estimated, the Loonie barely moved.

During the New York session, the USD/CAD grinds lower, trading at 1.2925 at the time of writing. The market sentiment has improved, as shown by risk-sensitive currencies like the CAD, the GBP, and the AUD got bid in the overnight session, while safe-haven peers drop. 

Positive news regarding vaccines helping tame the Omicron variant improved investors’ mood. That alongside high crude oil prices, with Western Texas Intermediate (WTI), the US crude oil benchmark up some 2.55% trading at $70.36 a barrel, underpins the Loonie, which trims some of the last week’s losses, as appetite for the greenback has improved.

In the meantime, the US Dollar Index, which tracks the buck’s performance vs. a basket of six rivals, drops some 0.02%, sitting at 96.53.

The Canadian economic docket featured Retail Sales for November. Statistics Canada announced that sales rose by 1.6% on a monthly basis reading, higher than the 1.0% estimated and a strong rebound after September’s 0.6% decline. Retail Sales excluding Autos increased by 1.3%, also stronger than the 0.8% estimations.

Additionally, USD/CAD traders would lean in US macroeconomic data. On Wednesday, the Gross Domestic Product for the Q3 and Fed’s favorite gauge of inflation, the Personal Consumption Expenditures Prices (PCE) for the Q3, will be released. By Thursday, Initial Jobless Claims and Durable Good Orders would be scrutinized by market participants.

USD/CAD Price Forecast: Technical outlook

The USD/CAD broke strong resistance found at the December 3 high at 1.2853. In the last two days, the pair has been trading range-bound in the 1.2850-1.2960 area, and as the year-end looms, it could probably remain subdued.

In the event of breaking to the upside, the first resistance would be 1.3000. A clear break of that level would expose November 13, 2020, high at 1.3172.

On the flip side, failure at 1.2960 would open the door for further losses. The first support would be 1.2900. The breach of the latter could send the pair sliding towards the December 3 high previous resistance-turned-support at 1.2853, and then the 1.2800 figure.