USD/CAD hangs closer to 10-month lows, FOMC minutes in focus

The USD/CAD pair struggled to register any meaningful recovery and held within striking distance of near 10-month lows touched in the previous session.

The pair on Tuesday tumbled to fresh multi-month lows, around the 1.2900 neighborhood in wake of the latest hawkish rhetoric by the BoC Governor Stephen Poloz. During an interview with a German news newspaper Handelsblatt, Poloz was quoted saying that it would be appropriate to start removing some of the monetary stimulus before inflation hits central bank's target.

Adding to this, the ongoing recovery in oil prices, with WTI crude oil jumping to fresh 3-week highs beyond the $47.00 mark further boosted demand for the commodity-linked currency - Loonie, and collaborated to the pair's slump to its lowest level since Sept. 2016. 

On Wednesday, the pair oscillated in a narrow trading range just below mid-1.2900s amid subdued US Dollar action as investors await the release of June FOMC meeting minutes to evaluate possibilities of another Fed rate hike action by the end of this year.

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Technical levels to watch

Immediate resistance is pegged near 1.2960 area, above which the pair is likely to make a fresh attempt to conquer the key 1.30 psychological mark before darting towards 1.3050-55 horizontal resistance.

On the flip side, weakness back below 1.2925 level is likely to accelerate the slide towards the 1.2900 handle, below which below which the pair would turn vulnerable to extend the near-term depreciating move further towards mid-1.2800s.