USD/CAD consolidates above mid-1.2800s, US CPI & FOMC awaited
| • Remains capped below the 1.2900 handle.
• A modest USD rebound helps offset bullish oil prices.
• US CPI/FOMC decision could help determine near-term direction.
The USD/CAD pair struggled for a firm direction and seesawed between tepid gains/minor losses through the early European session.
Despite yesterday's sharp rebound from the 1.2800 neighborhood, led by upbeat US PPI print and sliding crude oil prices, the pair failed just ahead of the 1.2900 handle.
The pair subsequently dropped back to mid-1.2800s important pivot-point on Wednesday and was being weighed down by an upset win for a Democrat candidate in a US Senate race and a goodish recovery in oil prices, which tends to benefit the commodity-linked Loonie.
Meanwhile, a modest pickup in the greenback demand, with the key US Dollar Index recovering early lost ground, helped the pair to bounce off lows. The rebound, however, seemed lacking strong conviction as investors remained on the sidelines and look forward to the highly anticipated FOMC decision for a fresh directional impetus.
Heading into the key event risk, the release of US inflation figures and the US President Donald Trump's speech on the tax reform plan might infuse some volatility and help traders to grab some short-term opportunities.
Technical levels to watch
Immediate resistance is pegged near 1.2880 level and is closely followed by the 1.2900 handle, above which the pair seems all set to surpass the 1.2915-20 supply zone and head towards testing the very important 200-day SMA hurdle near mid-1.2900s.
On the flip side, sustained weakness back below mid-1.2800s could drag the pair back towards the 1.2815-10 support area, which if broken might negate any bullish bias and turn the pair vulnerable to head back towards testing 1.2760 support.
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