USD/CAD recovery stalls at 1.2900 mark, EIA & FOMC eyed

A broad based US Dollar recovery and mild retracement in crude oil prices helped the USD/CAD pair to extend its recover from Tuesday's 8-week lows and jump back above 1.2900 handle before retracing few pips to currently trade around 1.2895-90 band. 

On Tuesday the pair fell for seventh consecutive session and tipped below 1.2800 handle, its lowest level since 24, recording loss of nearly 400-pips from last week's high near 1.3200 neighborhood. Continuous upsurge in crude oil prices and fading expectations of Fed rate-hike action had been the key factors exerting intense selling pressure around the major.

Wednesday's recovery is supported by comments from New York Fed president William Dudley on Tuesday that the Federal Reserve might consider raising interest rates further, as soon as in September. Hence, today's FOMC meeting minutes will provide fresh insight over the Fed's monetary policy outlook and provide fresh impetus for the pair's near-term direction.

Traders will also keep a close watch on today's release of official US crude oil inventories data by EIA, later during NY trading session, which would drive crude oil prices in the near-term and eventually affect commodity-linked currency, loonie.

Technical levels to watch

Further recovery from current levels is likely to confront a strong resistance at 100-day SMA near 1.2940 region, above which the pair seems all set to reclaim 1.3000 psychological mark. On the flip side, 1.2860-55 region (session low) now seems to protect immediate downside, which if broken seems to drag the pair back towards 1.2800 handle before extending its slide further towards its next major support near 1.2740-35 region.