USD/CAD posts modest daily gains around 1.2650 ahead of BoC policy announcements

USD/CAD is trading in a tight range following Tuesday's decline.
WTI consolidates weekly losses, hold above $64 ahead of EIA data.
Bank of Canada is expected to keep its policy rate unchanged at 0.25%.

Eren Sengezer FXStreet

The USD/CAD pair dropped below 1.2600 on Tuesday but staged a rebound to close the day with small losses at 1.2634. With the market action turning subdued ahead of key macroeconomic events on Wednesday, the pair is trading in a tight range around 1.2650 and posting small daily gains.

Eyes on US inflation data, BoC policy decision

Despite the broad-based USD weakness, the poor performance of crude oil made it difficult for the CAD to continue to gather strength and helped USD/CAD limit its losses. Following a two-day drop, the barrel of West Texas Intermediate (WTI) is up 0.6% on the day at $64.20 ahead of the US Energy Information Administration's (EIA) weekly Crude Oil Stocks Change data.

Meanwhile, the US Dollar Index is moving sideways around 92.00 supported by the recovery witnessed in the 10-year US Treasury bond yield, which lost 4.5% on Tuesday.

Later in the session, the Consumer Price Index data from the US will be looked upon for fresh impetus. Although the Fed uses the Personal Consumption Expenditures (PCE) Price Index as its preferred gauge of inflation, a higher-than-expected reading in Core CPI could help the USD find demand.

More importantly, the Bank of Canada (BoC) will release its Interest Rate Decision and publish the Rate Statement at 1500 GMT. The BoC is largely expected to keep its policy rate unchanged at 0.25% but the CAD could start to weaken against its rivals if the bank adopts a dovish tone in its policy statement.

Technical levels to watch for

USD/CAD

Overview
Today last price	1.2651
Today Daily Change	0.0011
Today Daily Change %	0.09
Today daily open	1.264

Trends
Daily SMA20	1.2652
Daily SMA50	1.2702
Daily SMA100	1.2845
Daily SMA200	1.3099

Levels
Previous Daily High	1.2686
Previous Daily Low	1.259
Previous Weekly High	1.274
Previous Weekly Low	1.2575
Previous Monthly High	1.287
Previous Monthly Low	1.2468
Daily Fibonacci 38.2%	1.2627
Daily Fibonacci 61.8%	1.2649
Daily Pivot Point S1	1.2592
Daily Pivot Point S2	1.2544
Daily Pivot Point S3	1.2497
Daily Pivot Point R1	1.2687
Daily Pivot Point R2	1.2734
Daily Pivot Point R3	1.2783

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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