• Resurfacing US-China trade tensions helped revive the USD demand.
• A modest pull-back in oil prices undermine Loonie and remain supportive.
• Focus remains on the latest FOMC monetary policy update, due later today.
The USD/CAD pair traded with a positive bias through the early European session and built on the overnight sharp rebound from over two-week lows.
Despite the prevalent strong bullish sentiment surrounding crude oil prices, which tend to underpin demand for the commodity-linked currency – Loonie, the pair showed remarkable resilience below 50-day SMA and staged a solid bounce during the US trading session on Tuesday.
The recovery extended through the early part of Wednesday’s trading session and was further fueled by a combination of supporting factors – a modest pickup in the US Dollar demand and a subdued action around crude oil prices, amid reemerging US-China trade tensions.
Bloomberg report that some US officials expressed concern that China is pushing back against the US demands in trade talks provided a minor boost to the greenback’s relative safe-haven status and prompted some profit-taking trade around oil markets.
The up-move, however, lacked strong bullish conviction as investors now seemed reluctant to place aggressive bets, rather preferred to wait on the sidelines ahead of today’s key event risk – the latest FOMC monetary policy update, due to be announced later today.
The key focus will be on the accompanying monetary policy statement, which coupled with the updated economic projections might help investors determine the greenback’s near-term trajectory and eventually provide some fresh directional impetus to the major.
Technical levels to watch