- USD/CAD edged lower on Wednesday and snapped two consecutive days of winning streak.
- The downtick seemed unaffected by weaker oil prices, which tend to undermine the loonie.
- Negative Fed rate speculations kept the USD bulls on the defensive ahead of Powell’s speech.
The USD/CAD pair edged lower through the Asian session on Wednesday and was last seen hovering around the lower end of its daily trading range, near mid-1.4000s.
The pair met with some supply on Wednesday, snapping two consecutive days of winning streak and for now, seems to have stalled this week's goodish recovery move from the 1.3900 round-figure mark. The pullback lacked any obvious catalyst and seems more likely to attract some dip-buying amid a weaker tone surrounding oil prices.
Concerns that a premature easing of lockdowns could lead to the second round of outbreak of the deadly coronavirus overshadowed Saudi Arabia's commitment to further deepen oil production cuts in June. This, in turn, led a modest pullback in oil prices, which might undermine the commodity-linked loonie and extended some support to the major.
On the other hand, the US dollar remained on the defensive in the wake of speculations that the Fed might be forced to push interest rates below zero. Bets for negative Fed rates increased further after the US President Donald Trump on Tuesday asked the US central bank to do more policy easing to support the US economy.
It is worth reporting that several FOMC members – including St. Louis Fed President James Bullard and Chicago Fed President Charles Evans – commented against the idea of negative interest rates. Hence, the key focus will be on the Fed Chair Jerome Powell's scheduled speech during the early North American session on Wednesday.
Heading into the key event risk, the US economic docket – highlighting the release of Producer Price Index (PPI) – might influence the USD price dynamics and assist traders to grab some short-term opportunities.
Technical levels to watch
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