The USD/CAD pair continued with its struggle to move past the 1.2300 mark and traded with a mild bearish bias on Wednesday.
The pair struggled to gain any follow through traction and has failed build on Monday's strong recovery move. Even on Tuesday, it managed to recover early losses to 1.2255 level but once again was rejected near the above mentioned handle.
On Wednesday, crude oil prices recovered part of previous session's slide, supported by Tuesday's bullish API report, and was seen benefitting the commodity-linked currency - Loonie.
This coupled with a mildly softer tone around the US Dollar, always backed by retracing US Treasury bond yields, further collaborated to the pair's offered tone through early European session.
Meanwhile, a typical pre-Fed caution trade has helped limit further losses, at least for the time being. Currently trading around 1.2280 level, investors now look forward to the much awaited outcome from a two-day FOMC meeting for some fresh directional impetus.
• US: Sep FOMC meeting in focus today - Westpac
Ahead of the key even risk, the EIA report on weekly US crude oil inventories would help traders grab some short-term trading opportunities.
Technical levels to watch
Immediate support remains near 1.2255-50 area, below which the pair could drift back to the 1.2200 handle before eventually dropping to test its next support near the 1.2175-70 region.
On the flip side, a follow through buying interest beyond the 1.2300 handle might continue to confront fresh supply near the 1.2340 region, which if cleared could extend the recovery move towards the 1.2400 handle.
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