USD/CAD remains in daily range around 1.37 as Fed offers no surprises

Following the usual quick fluctuation following the Fed decision, it didn't take long for the USD/CAD pair to settle around the 1.37 area. After dropping to a new session low at 1.3680, the pair erased its losses as the US Dollar Index rose above the 99 handle. At the moment, the pair is trading at 1.3702, down 0.07% on the day.

• FOMC's decisions regarding monetary policy implementation - May 3, 2017

The greenback's upsurge seems to be fueled by the rising Treasury yields amid a slightly hawkish tone seen in the FOMC policy statement. While the 10-year U.S. T-bond yield is gaining nearly 1% on the day, the US Dollar Index is at 99.10, up 0.3%.

The Committee hasn't acknowledged the recent weak data and left its language in the statement unchanged. After the statement, the Fed is seen to remain on track to hike the rates two more times in 2017, with the first one coming in June. The CME Group FedWatch tool showed that the markets are now pricing a 71.6% probability of a rate hike in June. 

• CME Group FedWatch June hike probability jumped above 70% post-Fed

Commenting on the statement, "there were slight nuances given that 1Q GDP was disappointing and the PCE deflator has softened recently, but the Fed suspect’s these developments will be transitory," said James Knightley, a Senior Economist at IGN.

Technical outlook

The pair faces the immediate hurdle at 1.3735 (2016, Feb. 25 high) followed by 1.38 (psychological level) and 1.3860 (2016, Feb. 24 high). To the downside, supports could be encountered at 1.3600 (psychological level/Dec. 28 high), 1.3540 (Apr. 27 low) and 1.3410 (Apr. 24 low).