USD/CAD struggles to recover above 1.26, trades near 2-month lows

• WTI remains in consolidation phase ahead of EIA's report.
• Greenback remains weak against rivals.
• Mixed data from the U.S. fails to lift the DXY.

The USD/CAD pair renewed its lowest level since October 20 at 1.2580 during the early trading hours of the NA session and is having a difficult time retaking the 1.26 handle. As of writing, the pair was trading at 1.2593, down 0.5% on the day.

Unless the pair recovers above the 1.2650 mark at the end of the session, it's going to record its eight straight negative daily close. The pair's recent drop had been fueled by a combination of a weaker greenback and a higher demand for commodity-linked currencies following crude oil's rally earlier this week.

The barrel of West Texas Intermediate rose to $60 on Tuesday for the first time since mid-June of 2015 and started to consolidate its gains. However, it hasn't staged a deep correction yet and continues to trade above the $59 handle. Later in the session, the EIA is going to release its weekly crude oil stock & production report. An increasing shale output from the U.S. could weigh on crude oil price ahead of the weekend and help the pair retrace its daily losses.

On the other hand, the US Dollar Index, which dropped to its lowest level in three months at 92.32 earlier today, is now at 92.40, still down 0.29% on the day. Today's data from the U.S. showed that the international trade deficit grew more than expected while the manufacturing activity in the Chicago area expanded at its fastest pace in more than five years in December. 

Technical levels to consider

The RSI indicator on the daily graph is approaching the 30 mark, suggesting that the pair is about to become technically oversold. The pair could encounter the first technical support at 1.2500 (psychological level) ahead of 1.2450 (Oct. 19 low) and 1.2410 (Sep. 29 low). On the flip side, resistances could be seen at 1.2605 (100-DMA), 1.2700 (psychological level) and 1.2770 (50-DMA).

Today's data from the U.S.

• US: Weekly initial claims was 245,000, unchanged from previous week
• US: Wholesale inventories for November $610.2 billion, up 0.7% from October 2017
• US: International trade deficit was $69.7 billion in November, up $1.6 billion from October
• Chicago PMI advances to best level since March 2011 at 67.6 in December