USD/CAD consolidates last week's gains, stays directionless near mid-1.28s

The USD/CAD pair, which recorded a 140-pip gain last week, is having a difficult time finding direction on Monday as investors remain on the sidelines ahead of Wednesday's critical FOMC meeting. As of writing, the pair was trading at 1.2851, virtually unchanged on the day.

The combination of a broad-based greenback strength and a weaker loonie amid falling crude oil prices weighed on the pair last week. After starting the new week below the 94 mark, the US Dollar Index has been moving sideways as investors are getting ready for the Fed to announce its updated economic projections and the 2018 rate hike forecasts, known as the 'dot plot.' At the moment, the index is down 0.1% on the day at 93.75.

On the other hand, following a relatively short-lasting fall in the early Asian session, the barrel of West Texas Intermediate recovered above the $57 mark to turn flat on the day, failing to provide a catalyst for the commodity-sensitive loonie. Although Sunday's meeting of the Organization of Arab Petroleum Exporting Countries produced some headlines that suggested OPEC would develop a strategy to end the output cut deal in June in case the market balanced by that time, the market reaction was limited as investors remain focused on the shale production in the United States.

With no significant macroeconomic data releases in the remainder of the day, the pair is likely to waver within its daily range.

Technical levels to consider

Despite today's subdued trading action, the RSI indicator on the daily graph stays below the 50 mark, suggesting that buyers are still in control. With a decisive break above 1.2865 (200-DMA) the pair could extend its upside toward 1.2915 (Oct. 31 high) and 1.3000 (psychological level). On the downside, supports could be seen at 1.2800 (psychological level), 1.2735 (50-DMA) and 1.2623 (Dec. 5 low).