USD/CAD holds steady above 1.3500 mark ahead of FOMC meeting minutes

USD/CAD lacks firm intraday direction and is influenced by a combination of diverging forces.
Sliding Oil prices, softer Canadian inflation data undermine the Loonie and lend some support.
The USD languishes near a multi-week low and cap gains ahead of the FOMC meeting minutes.

Haresh Menghani FXStreet

The USD/CAD pair struggles to capitalize on its gains registered over the past three days and oscillates in a narrow trading band through the first half of the European session on Wednesday. Spot prices, however, manage to hold above the 1.3500 psychological mark as traders keenly await the release of the highly-anticipated FOMC meeting minutes before placing fresh directional bets.

The minutes will be scrutinized closely for cues about the Federal Reserve's (Fed) rate-cut path, which, in turn, will play a key role in influencing the US Dollar (USD) price dynamics and provide a fresh directional impetus to the USD/CAD pair. In the meantime, the markets have fully priced out the possibility of early rate cuts by the Fed, which remains supportive of elevated US Treasury bond yields. This, along with a softer risk tone, lends some support to the safe-haven buck and limits the downside for the currency pair.

Meanwhile, expectations that the Fed will keep interest rates higher for longer have weighed on the outlook for fuel demand and drag Crude Oil prices lower for the second straight day. Apart from this, softer-than-expected Canadian consumer inflation data released on Tuesday is seen as another factor undermining the commodity-linked Loonie and offering support to the USD/CAD pair. In fact, Canadian CPI decelerated to the 2.9% YoY rate in January and core inflation measures dropped to the lowest levels in more than two years.

Meanwhile, fears of supply disruptions from the Middle East remain in the wake of a string of attacks in the Red Sea by Houthi rebels in Yemen. This could act as a tailwind for the Oil prices and hold back traders from placing aggressive bearish bets around the Canadian Dollar (CAD). Moreover, the recent range-bound price action witnessed over the past two weeks or so warrants some caution before confirming a firm near-term direction for the USD/CAD pair in the absence of any relevant economic data on Wednesday.

Technical levels to watch

USD/CAD

Overview
Today last price	1.3521
Today Daily Change	-0.0001
Today Daily Change %	-0.01
Today daily open	1.3522

Trends
Daily SMA20	1.3474
Daily SMA50	1.3409
Daily SMA100	1.3549
Daily SMA200	1.3478

Levels
Previous Daily High	1.353
Previous Daily Low	1.3472
Previous Weekly High	1.3586
Previous Weekly Low	1.343
Previous Monthly High	1.3542
Previous Monthly Low	1.3229
Daily Fibonacci 38.2%	1.3508
Daily Fibonacci 61.8%	1.3494
Daily Pivot Point S1	1.3486
Daily Pivot Point S2	1.345
Daily Pivot Point S3	1.3429
Daily Pivot Point R1	1.3544
Daily Pivot Point R2	1.3566
Daily Pivot Point R3	1.3601

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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