USD/CAD keeps the trade above 1.3000 ahead of FOMC

  • The pair keeps the upside well and sound above 1.3000.
  • Spot is eroding the key resistance line off 2016 peaks.
  • US FOMC meeting expected to drive the sentiment later in the day.

The greenback keeps the positive note vs. its Canadian peer on Wednesday, with USD/CAD managing to keep the trade above the psychological 1.30 handle.

USD/CAD looks to FOMC

The pair is up for the third session in a row today, advancing further north of the 1.3000 milestone and always on the back of a renewed buying interest around the buck.

In addition, the sideline theme around crude oil prices is collaborating with the lack of traction in CAD, in turn sustaining the up move in spot.

In the meantime CAD remains under pressure in response to uncertainties surrounding the NAFTA negotiations, while monetary policy divergence between the BoC and the Fed has also come to the fore as of late. In this regard, it is worth noting that US-CA 2-year yield spread has climbed to fresh 1-year tops above 60 pts.

Later in the session, the FOMC is seen hiking rates by 25 bps, while the focus of attention should be on the updated ‘dots-plot’. Further releases in the US docket include Producer Prices for the month of May.

USD/CAD significant levels

As of writing the index is up 0.16% at 1.3036 facing the next hurdle at 1.3047 (high Jun.13) seconded by 1.3070 (high Jun.5) and finally 1.3126 (2018 high Mar.19). On the flip side, a breach of 1.2968 (10-day sma) would open the door to 1.2927 (50% Fibo of the 2017 drop) and then 1.2920 (21-day sma).

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