- The USD / CAD oscillates within a range during the European session on Wednesday.
- A bullish USD and weaker oil prices continue to support the pair and help limit the decline.
- Investors await the key release Wednesday of the Canadian CPI report for further momentum.
The pair USD / CAD lacks a strong directional bias and oscillates between timid gains and minor losses around the region of 1.2550 during the European session on Wednesday.
The pair struggled to capitalize on the good bounce the day before, from below the 1.2500 psychological level, and witnessed subdued and range-bound price action on Wednesday. In the absence of a new catalyst, investors preferred to move on the sidelines and wait for the release of the latest Canadian consumer inflation figures from today.
In the meantime, the decline continues to be supported amid strong bullish sentiment around the US dollar, bolstered by prospects for an early tightening of monetary policies by the Fed. In fact, markets have been pricing in the possibility of an eventual Fed rate hike for July 2022 and Fed fund futures indicate a high probability of another rate hike for November.
Apart of this, a softer tone around crude oil prices weighed on the CAD, a currency pegged to commodity prices, and offered some support to the USD / CAD pair. WTI crude weakened near weekly lows and was pressured by Tuesday’s API report, which increased pressure on the Biden administration to release oil from emergency reserves to limit the rise in fuel prices.
However, the USD / CAD has, so far, struggled to gain any significant traction and has been swinging in a range, warranting some caution before opening aggressive directional positions. In addition to the Canadian CPI report, traders will take cues from the US housing market data. This, together with the dynamics of oil prices, could give some boost to the USD / CAD pair.
USD / CAD technical levels