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USD/CAD gains some positive traction for the second straight day, albeit lacks follow-through.
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Bearish Crude Oil prices continue to undermine the Loonie and act as a tailwind for the major.
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Traders, however, seem reluctant to place aggressive bets ahead of the FOMC policy decision.
The USD/CAD pair traded with a positive bias for the second day in a row on Wednesday, though lacked bullish conviction and remained below multi-day tops, around the 1.3615-1.3620 region touched earlier in the day. The spot price is currently trading around the 1.3600 round figure as traders keenly await the outcome of the highly anticipated two-day FOMC monetary policy meeting.
The Federal Reserve (Fed) is expected to announce its decision later in the US session and broadly maintain the status quo. Hence, the focus will be on the accompanying monetary policy statements and updated economic projections, especially the so-called “dot plots”. This, along with Fed Chair Jerome Powell’s comments at the post-meeting press conference, will be scrutinized for clues about the near-term policy outlook, which will affect US dollar (USD) price dynamics and give the USD a new directional impetus. /CAD pairs.
In the run-up to key central bank event risks, uncertainty over when the Fed might start easing its policy failed to help the USD build an overnight bounce from post-US CPI lows and acted as a headwind for the USD/CAD pair. The downside, however, remained in the wake of a rise in crude oil prices, which fell to a six-month low amid concerns over oversupply and despite signs of a draw in US inventories. This, in turn, weakens the commodity-linked loonie and supports the bid tone surrounding the major.
Nevertheless, the aforementioned mixed fundamentals warrant some caution before placing aggressive directional bets around the USD/CAD pair. Furthermore, the past one week has witnessed range-bound price action that points to indecision among traders over the near-term trajectory of the major.
Technical levels to watch
USD/CAD
