USD/CAD trades at multi-year lows near 1.2670 ahead of PMI data

• USD/CAD is falling for the seventh straight trading day.
• WTI touched its highest level since February 2020 at $49.80.
• Focus shifts to PMI data from Canada and the US.

The USD/CAD pair lost 140 pips last week and extended its slide on Monday pressured by broad USD weakness and surging crude oil prices. As of writing, the pair was trading at its lowest level since April 2018 at 1.2672, down 0.43% on a daily basis.

CAD capitalizes on oil rally

Risk flows continue to dominate the financial markets on the first trading day of 2021. Boosted by heightened optimism for a steady recovery in global energy demand, the barrel of West Texas Intermediate (WTI) climbed to its highest level since February 2020 at $49.80 on Monday and helped CAD gather strength against its rivals.

Earlier in the day, Reuters reported that most OPEC+ experts said that they don't support an increase in the group's oil output from February by another 500,000 barrels per day and this headline seems to be helping WTI push higher.

On the other hand, the greenback struggles to find demand as a safe haven and the US Dollar Index is losing 0.5% around 89.50.

In the second half of the day, the IHS Markit will release the Manufacturing PMI data for both Canada and the United States. Additionally, investors will keep a close eye on US stocks, which remain on track to open at fresh all-time highs. If the market mood remains upbeat in the American session, the USD is likely to remain weak against its rivals. 

Technical levels to watch for