USD/CAD pulls away from multi-week highs, holds above 1.3200

• USD/CAD lost its traction after climbing to 1.3250 area.
• US Dollar Index clings to modest daily gains above 93.00.
• WTI pares early losses, stays flat near $40 following Wednesday’s upsurge.

The USD/CAD pair rose to its highest level since September 9th at 1.3248 on Thursday but struggled to preserve its bullish momentum. As of writing, the pair was still up 0.22% on the day at 1.3205.

DXY pushes higher in the aftermath of FOMC

The USD’s market valuation remains the primary driver of USD/CAD’s movements. Following the Federal Reserve’s policy announcements and FOMC Chairman Jerome Powell’s press conference, the US Dollar Index (DXY) staged a rally and touched its best level in more than two weeks at 93.59. 

Commenting on the market reaction, “with the Fed refraining from rocking the boat, the focus shifts to elected officials,” said FXStreet analyst Yohay Elam. “After a long deadlock, there is new hope for a new fiscal relief package. With the Fed out of the way – and unhelpful to markets – the next rally depends on lawmakers. Without progress there, stocks could fall and the safe-haven dollar could rise.”

However, the DXY seems to have gone into a consolidation phase ahead of mid-tier macroeconomic data releases from the US and was last seen posting modest gains at 93.22.

Meanwhile, the barrel of West Texas Intermediate (WTI) made a technical correction after gaining more than 4% on Wednesday but pared its daily losses to turn flat above $40. If the WTI continues to build on this week’s rally, the commodity-related loonie could stay resilient against the USD and limit USD/CAD’s upside.

Technical levels to watch for