“¢ USD continues gaining positive traction and remains supportive.
“¢ Weaker crude oil prices weigh on Loonie and provide an additional boost.
“¢ Today’s US economic data/latest FOMC decision eyed for fresh impetus.
The USD/CAD pair regained some positive traction on Wednesday and built on overnight modest rebound from 1-1/2 month lows.
On Tuesday, the pair weakened back below the key 1.30 psychological mark in reaction to upbeat Canadian economic data, especially stronger than expected monthly GDP growth figures, albeit managed to find some support near 100-day SMA.
A combination of factors, ranging from a follow-through US Dollar demand and weaker crude oil prices, provided a minor lift through the early European trading session on Wednesday.
Despite the latest report that the Trump administration was planning to impose higher tariffs on around $200 billion worth of Chinese imports, the greenback edged higher and remained supportive of a mildly positive tone surrounding the major.
Adding to this, crude oil prices continued to be weighed down by overnight API report, which showed an unexpected rise in the US stockpiles and eventually undermined demand for the commodity-linked currency – Loonie.
The uptick, however, lacked any strong conviction as investors seemed reluctant to place any aggressive bets ahead of today’s key event risk – the latest FOMC monetary policy decision, due to be announced later in the day.
In the meantime, the US economic docket – featuring the release of ADP report on private sector employment, ISM manufacturing PMI and the official EIA crude oil inventories report, will be looked upon to grab some short-term trading opportunities.
Technical levels to watch
Immediate resistance is pegged near 1.3040 horizontal level, above which the recovery move could get extended towards overnight swing high, around the 1.3095-1.3100 region. On the flip side, weakness below the 1.30 handle might continue to find support near the 1.2985 region (100-day SMA), which if broken might pave the way for an extension of the pair’s near-term bearish trajectory.
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