- WTI erases Monday's losses, trades above $59 on Tuesday.
- US Dollar Index looks to close in red for second straight day.
- The FOMC is expected to keep its policy rate unchanged on Wednesday.
Following a modest recovery toward 1.3250 during the European trading hours, the USD/CAD pair lost its traction and is now looking to close the day with small losses near 1.3230.
Following Monday's correction, crude oil prices pushed higher on Tuesday boosted by heightened hopes of the US delaying the December 15 tariff hike on Chinese imports and easing concerns over an economic slowdown in the euro area and helped the commodity-sensitive CAD stay resilient against its peers.
Additionally, the Energy Information Administration (EIA) in its monthly report said that it raised its forecast for 2020 global oil demand growth by 50,000 barrels per day (bpd) to 1.42 million bpd to support oil prices. As of writing, the barrel of West Texas Intermediate was trading at $59.20, adding 0.6% on a daily basis.
USD weakens slightly as attention shifts to FOMC
On the other hand, the greenback struggles to find demand as investors are waiting for the FOMC to announce its monetary policy decisions and the updated economic projections on Wednesday. At the moment, the US Dollar Index is down 0.16% on the day at 98.48.
Although investors don't expect the Fed to make any changes to its policy rate, FOMC Chairman Powell's remarks on the policy outlook will be looked upon for fresh impetus. Previewing the event, "we expect the Fed to reiterate its comfort with policy as it is, with little change in the projections," said ABN AMRO senior economist Bill Diviney. "As growth indicators come in weaker than the Fed expects, we think this will push the Committee to ease further, with one more rate cut likely in Q1."
Technical levels to watch for
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