#USDCAD @ 1.33867 retreats from the 1.3400 neighbourhood or a two-year high set earlier this Wednesday. (Pivot Orderbook analysis)

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• USD/CAD retreats from the 1.3400 neighbourhood or a two-year high set earlier this Wednesday.
• A sharp intraday rally in crude oil prices underpins the loonie and acts as a headwind for the pair.
• Retreating US bond yields is holding back the USD bulls from placing fresh bets and capping gains.
• Traders now seem to move to the sidelines and await the highly-anticipated FOMC policy decision.

The pair currently trades last at 1.33867.

The previous day high was 1.3375 while the previous day low was 1.3227. The daily 38.2% Fib levels comes at 1.3319, expected to provide support. Similarly, the daily 61.8% fib level is at 1.3284, expected to provide support.

The USD/CAD pair hits a two-year high on Wednesday, though struggles to capitalize on the move and retreats a few pips from the 1.3400 neighbourhood. The pair, however, manages to stick to its modest intraday gains and is trading around the 1.3375-1.3380 region during the early European session.

The US dollar gains strong follow-through traction for the second straight day and remains supported by hawkish Fed expectations. This, in turn, is seen as a key factor acting as a tailwind for the USD/CAD pair. The US central bank is widely anticipated to deliver another supersized 75 bps rate increase at the end of a two-day policy meeting on Wednesday. The markets have also priced in a small possibility of a full 100 bps hike, which, along with the prevalent cautious mood, continues to lend support to the safe-haven greenback.

The market sentiment remains fragile amid concerns about a deeper global economic downturn. That said, a modest pullback in the US Treasury bond yields is holding back the USD bulls from placing aggressive bets. Apart from this, a sharp intraday rally in crude oil prices underpins the commodity-linked loonie and further contributes to capping gains for the USD/CAD pair. Investors also seem reluctant and prefer to move to the sidelines ahead of the highly-anticipated FOMC policy decision, scheduled later during the US session.

Investors will further take cues from the updated economic projections and the so-called dot plot. Furthermore, Fed Chair Jerome Powell’s remarks at the post-meeting press conference will be scrutinized for clues about the future rate-hiking path. This will play a key role in driving the USD demand in the near term. Apart from this, oil price dynamics should help determine the next leg of a directional move for the USD/CAD pair. Heading into the key event risk, spot prices seem more likely to consolidate in a range.

Technical Levels: Supports and Resistances

USDCAD currently trading at 1.3377 at the time of writing. Pair opened at 1.3365 and is trading with a change of 0.09 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.3121, 50 SMA 1.2985, 100 SMA @ 1.2919 and 200 SMA @ 1.2801.

The previous day high was 1.3375 while the previous day low was 1.3227. The daily 38.2% Fib levels comes at 1.3319, expected to provide support. Similarly, the daily 61.8% fib level is at 1.3284, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 1.327, 1.3175, 1.3122
• Pivot resistance is noted at 1.3417, 1.347, 1.3565

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