USD/CAD remains confined in a range around 1.2500 mark, awaits BoC/Powell’s testimony
|- USD/CAD was seen oscillating in a range through the first half of the European session.
- Retreating oil prices extended some support, a modest USD weakness capped the upside.
- Investors await BoC policy decision and Fed Chair Powell’s testimony for a fresh impetus.
The USD/CAD pair struggled for a firm direction and remained confined in a range around the key 1.2500 psychological mark through the first half of the European session.
A combination of diverging forces failed to assist the USD/CAD pair to capitalize on the previous day's strong positive move, instead led to a subdued/range-bound price action on Wednesday. A modest pullback in crude oil prices undermined the commodity-linked loonie and extended some support to the major.
However, a softer tone surrounding the US dollar kept a lid on any meaningful upside for the USD/CAD pair. Investors also seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines ahead of the Bank of Canada monetary policy decision, due later during the early North American session.
This will be followed by the post-meeting BoC press conference and the Fed Chair Jerome Powell's semi-annual testimony before the House Financial Services Committee. Powell's remarks on the latest inflation figures should influence market expectations about the Fed's policy outlook and drive the USD in the near term.
Investors have been pricing in the prospects for an earlier than expected monetary policy tightening by the Fed, which was reinforced by Tuesday's stronger US CPI prints. Powell's comments may offer clues about the likely timing of tapering/interest rate hikes and provide a fresh directional impetus to the USD/CAD pair.
Technical levels to watch
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