USD/CAD higher at 1.3060 amid cautious trade ahead of BOC

The USD/CAD pair traded in a narrow range but has held on to its gains above 1.3050 level as investors remained cautious ahead of BOC.

The pair reversed sharply from 1.3135 region, 6-week high level, on Tuesday and dropped below 1.3000 handle before recovering back to finally settle around 1.3040 level. A broadly weaker US Dollar triggered the initial leg of Tuesday's reversal and was further supported by a sharp recovery in crude oil prices. 

On Wednesday, the Canadian Dollar is being weighed down by weaker oil prices led by renewed worries of global supply glut ahead of Wednesday's EIA report. Adding to improving sentiment around the US Dollar is further extending support for the USD/CAD pair. 

However, Wednesday's key focus would be on BOC's monetary policy decision and quarterly Monetary Policy Report, later during NA trading session, which is likely trigger a fresh bout of volatility for the USD/CAD major.

Technical levels to watch

On the immediate upside, 1.3100 round figure mark might act as immediate resistance. This is closely followed by 6-week high resistance near 1.3130-40 region, which if cleared decisively should immediately boost the pair towards 1.3188 (May highs). 

On the flip side, 1.3000 psychological mark and 1.2980-60 confluence region, comprising of 100-day and 50-day SMAs, remains immediate strong support to defend. A convincing break below 1.2980-60 strong support now seems to drag the pair immediately towards a short-term ascending trend-line support near 1.2830-25 region.