USD/CAD pulls away from multi-week highs, clings to strong gains around 1.2770

• USD/CAD rose to 1.2823 in the early American session.
• US Dollar Index holds above 90.50 ahead of FOMC.
• WTI rebounds above $53 after EIA’s weekly report. 

The USD/CAD pair extended its daily rally in the early American session and reached its highest level in more than two weeks at 1.2843. With crude oil prices staging a rebound in the last hours, the commodity-sensitive loonie showed some resilience against the USD and the pair retreated below 1.2800. As of writing, USD/CAD was up 0.65% on the day at 1.2771.

Focus shifts to FOMC

The heavy selloff witnessed in major equity indexes after the opening bell on Wednesday allowed the greenback to continue to gather strength against its rivals as a safer alternative. At the moment, the US Dollar Index is up 0.5% on the day at 90.62 and the S&P 500 Index is losing 1.32% at 3,798.

Investors now wait for the US Federal Reserve to release its policy statement. Earlier in the day, the data from the US showed that Durable Goods Orders in December increased by 0.2% on a monthly basis. Although this reading missed the market expectation of 0.9%, it failed to trigger a meaningful market reaction. 

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Meanwhile, the US Energy Information’ (EIA) weekly report revealed that the crude oil stocks in the US fell by nearly 10 million barrels last week. The barrel of West Texas Intermediate (WTI), which slumped below $52 earlier in the day, reversed its direction and is currently up 0.8% at $53.15.

Technical levels to watch for