“¢ A modest USD rebound extends some support and helped limit further downside.
“¢ Positive oil prices underpinned Loonie and kept a lid on any meaningful up-move.
“¢ Today’s release of Canadian CPI/US durable goods orders eyed for fresh impetus.
The USD/CAD pair lacked any firm directional bias and oscillated in a narrow trading band, above mid-1.3100s through the Asian session on Wednesday.
The pair consolidated its overnight sharp retracement slide of around 80-pips, with a combination of diverging forces failing to provide any meaningful impetus and leading to a subdued/range-bound price action.
The US Dollar recovered a part of the previous session’s slide to the lowest level since Feb. 5, touched in the aftermath of the Fed Chair Jerome Powell’s dovish message, and was seen extending some support. In his prepared remark for semi-annual testimony to Congress on Tuesday, Powell reiterated that the central bank would stay patient on monetary policy and continued exerting downward pressure on the greenback.
However, a goodish pickup in oil prices, with WTI crude oil rallying back to the $56.00/barrel mark, underpinned the commodity-linked currency – Loonie and kept a lid on any meaningful up-move for the major. Oil prices remained supported by the overnight API report that showed declining US crude oil inventories and OPEC+ supply cuts, despite mounting pressure from the US President Donald Trump.
Investors also seemed reluctant to place any aggressive bets ahead of today’s important macroeconomic releases – the latest Canadian consumer inflation figures and the US durable goods orders data, due later during the early North-American session. This coupled with the Fed Chair Jerome Powell’s second day of testimony before the Congress might provide some impetus and contribute towards producing some meaningful trading opportunities on Wednesday.
Technical levels to watch
The very important 200-day SMA, around the 1.3150-45 region, might continue to act as immediate support, which if broken might turn the pair vulnerable to accelerate the slide and test sub-1.3100 level. On the flip side, the 1.3180-85 region, closely followed by the 1.3200 handle now seems to act as an immediate resistance, which if cleared might assist the pair to make a fresh attempt to clear 100-day SMA barrier near mid-1.3200s.
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