USD/CAD edges higher to 1.3600 mark amid bearish Oil prices, looks to Fed for fresh impetus

• USD/CAD gains some positive traction for the second straight day, albeit lacks follow-through.
• Bearish Crude Oil prices continue to undermine the Loonie and act as a tailwind for the major.
• Traders, however, seem reluctant to place aggressive bets ahead of the FOMC policy decision.

The USD/CAD pair trades with a positive bias for the second successive day on Wednesday, albeit lacks bullish conviction and remains below a multi-day peak, around the 1.3615-1.3620 region touched the previous day. Spot prices currently trade around the 1.3600 round figure as traders keenly await the outcome of the highly-anticipated two-day FOMC monetary policy meeting.

The Federal Reserve (Fed) is scheduled to announce its decision later during the US session and is widely expected to maintain the status quo. Hence, the focus will remain on the accompanying monetary policy statement and the updated economic projections, especially the so-called “dot plot”. This, along with Fed Chair Jerome Powell’s remarks at the post-meeting press conference, will be scrutinized for clues about the near-term policy outlook, which will influence the US Dollar (USD) price dynamics and provide a fresh directional impetus to the USD/CAD pair.

In the run-up to the key central bank event risk, the uncertainty over the timing of when the Fed may begin easing its policy fails to assist the USD to build on the overnight bounce from the post-US CPI low and acts as a headwind for the USD/CAD pair. The downside, however, remains cushioned in the wake of bearish Crude Oil prices, which dropped to a fresh six-month low amid oversupply concerns and despite signs of a draw in US inventories. This, in turn, undermines the commodity-linked Loonie and remains supportive of the bid tone surrounding the major.

Nevertheless, the aforementioned mixed fundamental warrants some caution before placing aggressive directional bets around the USD/CAD pair. Furthermore, Furthermore, the range-bound price action witnessed over the past week or so points to indecision among traders over the near-term trajectory for the major.

Technical levels to watch