USD/CAD eases below 1.24 as WTI recovers to $52, Yellen eyed

After refreshing its 20-day peak at 1.2405 in the early trading hours of the NA session, the USD/CAD pair struggled to extend its upside and started to retrace its gains. As of writing, the pair was trading at 1.2385, still up 0.12% on the day.

The US Dollar Index, which spent the Asian session in a tight range near mid-92s, gained traction in the second half of the day and touched its highest level since late August at 93.03 before going into a consolidation phase ahead of the Fed Chairwoman Yellen's speech. Although today's macroeconomic data from the U.S. were not seen as market movers, they were good enough to keep investors pricing another rate hike in 2017. Moreover, Fed Governor Lael Brainard, who earlier this month said that the Fed should be cautious about making further rate hikes, refrained from commenting on the monetary policy in her speech, allowing the DXY's bullish momentum to preserve its strength. 

On the other hand, crude oil prices took a break from the robust rally that started on September 11 and consolidated its recent gains on Tuesday. However, after falling to $51.40, the barrel of West Texas Intermediate was able to retake the $52 handle in the last hours, allowing the commodity-sensitive loonie to show resilience against the buck.

With no more data left in the session, Yellen's speech will be the next catalyst. Investors will be looking for clues that could affirm a December rate hike, which could provide an additional boost to the greenback and help the pair close the day above the 1.24 mark. 

• US: Focus on Yellen - TDS

Technical outlook

The pair could encounter the immediate resistance at 1.2455 (50-DMA) ahead of 1.2500 (psychological level) and 1.2550 (Aug. 29 high). On the downside, supports align at 1.2300 (psychological level/10-DMA), 1.2255 (20-DMA) and 1.2120 (Sep. 15 low).