- USD / CAD registers a modest rebound from the multi-year lows touched earlier this Wednesday.
- Moderate crude oil prices weigh on the CAD and offer some support to the pair.
- The rise appears limited amid reluctance to face the FOMC’s monetary policy decision.
The pair USD / CAD has managed to bounce around 25 pips from multi-year lows and trades with modest gains at the start of the European session on Wednesday, just above the 1.2450 region.
A combination of factors has helped the pair to reverse a decline in the Asian session to the region of 1.2435, the lowest level since February 2018, and recover a part of the losses of the previous day. Crude oil prices have weakened below the $ 65 / barrel level, which has weighed on the Canadian dollar, a currency pegged to commodity prices, and offered some support to the USD / CAD pair.
Oil has struggled to capitalize on the rally the day before from a four-day lows amid concerns that the stagnation of vaccine launches in Europe could slow down the recovery of fuel demand. The temporary suspension of the Oxford / AstraZeneca coronavirus vaccine in Europe overshadowed the bullish API report, which showed an unexpected drop in US crude inventories.
On the other hand, Prospects for a Relatively Quicker US Economic Recovery they have continued to prop up the US dollar and have further contributed to the modest USD / CAD rebound. USD bulls do not appear to be affected by disappointing monthly US retail sales data on Tuesday, but instead were inspired by soaring US Treasury yields.
The Upbeat US economic prospects have fueled speculation about a possible pickup in US inflation and they have raised doubts that the Fed will keep interest rates ultra-low for a longer period. This, in turn, has pushed the benchmark 10-year US government bond yield above 1.60%, close to the highs of more than a year hit last week.
Nevertheless, expectations that the Fed could take action to stem any further increase in the cost of long-term borrowing they have acted as a hindrance to US bond yields. This has been seen as the only factor that could prevent the bulls from opening aggressive positions and could limit gains for the USD / CAD pair ahead of the FOMC policy decision, which will be released during today’s American session.
USD / CAD technical levels
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