USD/CAD retreats to 1.3050 area amid decisive oil recovery

• Barrel of WTI gains more than 1.5% on Monday.
• US Dollar Index stays in green above the 97 handle.
• Coming up: Federal Reserve Bank of Chicago's National Activity Index.

The USD/CAD pair spent the first half of the day moving sideways in the tight 1.3060-70 range but came under modest selling pressure in the last hours as the rising crude oil prices helped the commodity-related loonie gather strength against its major rivals. As of writing, the pair was trading at 1.3050, losing 0.07% on a daily basis.

After Iran seized another British oil tanker last Friday, the heightened geopolitical tension in the Middle East revived concerns over supply disruptions and provided a boost to crude oil prices. As of writing, the barrel of West Texas Intermediate was trading at $56.75, up 1.85% on a daily basis.

On the other hand, ahead of this week's critical PMI and durable goods orders data, which are likely to impact the probability of the Fed opting out for multiple rate cuts in the remainder of the year, the US Dollar Index is posting small gains above the 97 handle.

Later in the session, the Federal Reserve Bank of Chicago will release its National Activity Index and there won't be any macroeconomic data releases from Canada. In fact, this week's Canadian economic docket won't be featuring any data of importance and the USD's valuation and crude oil's performance are likely to continue to drive the pair's action.

Technical levels to watch for