USD/CAD edges higher toward 1.28 as WTI eases to $57

• Crude oil falters on OPEC's expectation of slower growth in demand.
• US Dollar is preserving daily gains near the 95 handle.
• Federal Reserve Chair Yellen's speech later in the session awaited.

After testing the 1.27 handle on Monday, the USD/CAD pair reversed course on Tuesday and is now approaching the 1.28 handle as the loonie weakens amid falling crude oil prices. As of writing, the pair was trading at 1.2777, adding 0.57% on the day.

Crude oil continues to drive the demand for the loonie

On Monday, the barrel of West Texas Intermediate settled at its highest level in nearly two years at $57.40 on heightened expectations of an extension to the OPEC/non-OPEC deal until the end of 2018. However, oil prices failed to extend this recent rally as OPEC Secretary-General Mohammad Barkindo's report ahead of the 2017 World Oil Outlook highlighted a slowdown in the global demand. Although the short-term and the medium-term demand is still expected remain robust, the widespread use of electric vehicles (EVs) is likely to dent the need for oil considerably by 2030. At the moment, the barrel of WTI is trading at $57, losing 0.6% on the day.

• OPEC's World Oil Outlook: Demand set to increase by 2 mb/d from first to the second half of 2017
• OPEC's Barkindo: Global oil demand growth has been robust

On the other hand, amid a lack of fresh fundamental drivers, the US Dollar Index is back in its recent uptrend following yesterday's technical correction, which supports the pair rise on Tuesday. As of writing, the DXY is up 0.35% at 94.95.

Later in the session, Federal Reserve Chair Janet Yellen's is going to be delivering her remarks at the "Presentation of the Paul H. Douglas Award for Ethics in Government" in Washington at 19:30 GMT. Nonetheless, markets don't expect Yellen to comment on the monetary policy outlook and oil prices are likely to continue to impact the pair's price action. 

Technical outlook

According to the FXStreet's technical confluence indicator,  the initial hurdle for the pair is located at 1.2800 (10-DMA/Fibo 38.2% of 1-week range) followed by 1.2915 (Oct. 27 high) and 1.3000 (psychological level). On the downside, supports could be encountered 1.2700 (psychological level/20-DMA), 1.2620 (Oct. 24 low) and 1.2525 (100-DMA).