USD/CAD eases from 2-week tops, focus on Canadian CPI/BoC decision

• USD/CAD gains some traction amid stronger USD, sliding oil prices.
• The upside remains capped ahead of the BoC monetary policy update.

The USD/CAD pair edged higher on Wednesday and climbed to near two-week tops, albeit struggled to capitalize on the momentum and failed ahead of the 1.3100 round-figure mark.

The pair gained some follow-through traction for the second consecutive session on Wednesday and was being supported by a combination of factors – broad-based US dollar strength and a weaker tone surrounding crude oil prices.

Bulls seemed reluctant ahead of BoC

The greenback remained supported by expectations that the US economy will continue to expand and diminishing odds for any further rate cuts by the Fed. The bullish sentiment got an additional boost from a goodish intraday pickup in the US Treasury bond yields.

The pair was further supported by a modest pullback in oil prices, which tend to undermine demand for the commodity-linked currency – the loonie. In fact, oil prices fell around 0.5% on Wednesday in the wake of the International Energy Agency's (IEA) forecast of a market surplus in the first half of this year.

Despite the positive factors, the uptick lacked any strong bullish conviction and remained capped below monthly swing highs, around the 1.3100 handle, as investors seemed reluctant to place aggressive bets ahead of the latest BoC monetary policy update later this Wednesday.

Ahead of the key event risk, the release of the latest Canadian consumer inflation figures might further contribute towards providing some short-term trading impetus during the early North-American session amid absent relevant market-moving economic data from the US.

Technical levels to watch