USD/CAD: FOMC Minutes Holds the Key to Near-term Price Action

Summary:

The USD/CAD is trading slightly lower after higher than expected CPI data, but the FOMC minutes holds the key to short term price action.

Hotter-than-expected consumer inflation data did very little to prop up the Canadian Dollar, which continues to face some headwinds from falling oil prices ahead of the FOMC minutes due for release later on Wednesday.

Canada’s CPI for July came in at 0.6%, beating the previous and consensus numbers of 0.3%. However, the Loonie continues to trade slightly higher versus the greenback by 0.03% as of writing. Despite a slight uptick in WTI crude oil, the sentiment for oil prices remains negative, limiting any gains the loonie has made against the dollar.

Price action on the daily chart reveals choppy price movement, as traders await the FOMC minutes to see if the language of the minutes is in line with the tapering expectations.

Technical Levels to Watch

Following the breakout from the falling wedge pattern, the USD/CAD has met resistance at 1.26477. Price needs to break this level for the bulls to march towards 1.27419 initially before 1.27978 comes into the picture as an additional upside barrier.

On the flip side, a decline below 1.25964 allows the pair to reclaim the psychological support at 1.2500 (mid-August lows) before 1.24489 and 1.23998 come into the picture as additional downside targets.