USD/CAD remains confined in a range around 1.2900 mark, Canadian CPI/US data awaited

USD/CAD is seen consolidating in a range just below a one-week high touched on Monday.
A modest uptick in crude oil prices underpins the loonie and acts as a headwind for the pair.
Recession fears, hawkish Fed expectations offer support to the USD and limit the downside.
Investors eye the Canadian CPI report and US economic data for short-term trading impetus.

Haresh Menghani FXStreet

The USD/CAD pair struggles to capitalize on the overnight strong rally to a one-week high and witnesses subdued/range-bound price action on Tuesday. The pair remains confined in a narrow trading band through the early European session and is currently placed around the 1.2900 round-figure mark.

A modest uptick in crude oil prices offers some support to the commodity-linked loonie. The US dollar, on the other hand, is seen consolidating its strong gains recorded over the past two trading sessions. The combination of factors acts as a headwind for the USD/CAD pair, though the fundamental backdrop still seems tilted in favour of bullish traders.

The disappointing Chinese economic data released on Monday added to market worries about a global economic downturn, which could hit fuel demand and cap oil prices. Recession fears, along with hawkish Fed expectations, should continue to underpin the safe-haven USD and further contribute to limiting the downside for the USD/CAD pair, at least for the time being.

Despite last week's softer US CPI report, Fed officials stressed that it is too soon to declare a victory on inflation and have maintained a hawkish tone. This, in turn, suggested that the Fed would stick to its policy tightening path and remained supportive of elevated US Treasury bond yields, offering support to the buck ahead of the FOMC minutes on Wednesday.

The markets are currently pricing in a greater chance of at least a 50 bps rate hike at the September FOMC meeting. Hence, the minutes would be looked upon for clues about the possibility for a larger 75 bps move. This would play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for the USD/CAD pair.

In the meantime, traders on Tuesday would take cues from the release of the latest Canadian consumer inflation report. The US economic docket, meanwhile, features housing market data and Industrial Production figures. This could drive the USD, which, along with the sentiment surrounding oil prices, would provide a fresh impetus to the USD/CAD pair.

Technical levels to watch

USD/CAD

Overview
Today last price	1.2907
Today Daily Change	0.0002
Today Daily Change %	0.02
Today daily open	1.2905

Trends
Daily SMA20	1.2852
Daily SMA50	1.2889
Daily SMA100	1.2803
Daily SMA200	1.2748

Levels
Previous Daily High	1.2934
Previous Daily Low	1.2769
Previous Weekly High	1.295
Previous Weekly Low	1.2728
Previous Monthly High	1.3224
Previous Monthly Low	1.2789
Daily Fibonacci 38.2%	1.2871
Daily Fibonacci 61.8%	1.2832
Daily Pivot Point S1	1.2805
Daily Pivot Point S2	1.2704
Daily Pivot Point S3	1.264
Daily Pivot Point R1	1.297
Daily Pivot Point R2	1.3035
Daily Pivot Point R3	1.3135

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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