USD/CAD struggles near 2-week lows, around 1.3200 handle as focus shifts to FOMC minutes

   •  The USD continues to be weighed down by weaker US bond yields.
   •  Bullish consolidative oil price action does little to provide any impetus.
   •  The key focus remains on today’s release of the latest FOMC minutes.

The USD/CAD pair dropped to two-week lows, or sub-1.3200 level, during the Asian session on Wednesday, albeit managed to recover some ground thereafter.

The pair extended last week's retracement slide from the 1.3340 region, or near three-week tops, and remained under some selling pressure for the fifth consecutive session. The US Dollar continues to be weighed down by the overnight sharp fall in the US Treasury bond yields and was seen as one of the key factors exerting some downward pressure.

Despite the Cleveland Fed President Loretta Mester's overnight comments, saying that the Fed may need to raise interest rates in 2019, investors continue to price in a dovish FOMC and the same was evident from a sharp fall in the US government bond yields. In fact, yields on the benchmark 10-year US bond dropped to an 11-day low in the previous session, which eventually kept the USD bulls on Wednesday.

Meanwhile, a subdued action around oil markets, with WTI crude oil consolidating recent gains to YTD tops, did little to influence demand for the commodity-linked currency - Loonie, with the USD price dynamics turning out to be an exclusive driver of the pair's weaker tone ahead of today's important release of the latest FOMC meeting minutes.

The minutes from the January Fed meeting will be closely watched for fresh insights over the central bank's near-term monetary policy outlook and rate-hike path for 2019, which should play an important role in determining the greenback's near-term trajectory.

Technical levels to watch

Any meaningful recovery attempt now seems to confront some fresh supply near the 1.3235 region (100-day SMA), above which the pair is likely to test the 1.3280 resistance before aiming to reclaim the 1.3300 round figure mark. On the flip side, the downfall could get extended towards the very important 200-day SMA support, around the 1.3140 region, which if broken might turn the pair vulnerable to challenge the 1.3100 handle.