Ella 
USD/CAD is oscillating lower in Asia on Wednesday, currently trading around 1.3700, but the decline lacks bearish momentum. USD/CAD remains near Tuesday’s highest level since April 19 at 1.3790 as traders await more clues on the Fed’s initiation of rate cuts before making directional bets.
As such, the market’s focus remains on the latest consumer inflation data released by the US, as well as the outcome of the two-day Federal Open Market Committee (FOMC) meeting later today. After the Fed’s decision, it will also release updated economic forecasts as well as the so-called “dot plot”, which will provide new insights into the Fed’s rate cut path. This will play a key role in influencing the recent US dollar (USD) price dynamics and provide some obvious thrust to the USD/CAD pair.
Ahead of the key data/event risk period, more and more investors believe that the Fed will maintain higher interest rates for a longer period of time amid a strong US labor market and stagnant inflation, which has helped the US dollar to remain stable near the one-month high hit on Tuesday. This has therefore provided some support for USD/CAD, helping to prevent the decline of USD/CAD. However, USD/CAD upside appears limited following the rally in crude oil prices, which tend to support the commodity-linked Canadian dollar. That said, aggressive traders still need to remain cautious amid a mixed fundamental environment.
From a technical perspective, USD/CAD’s latest breakout above the 1.3740-1.3750 supply zone is seen as a new trigger for bulls. Moreover, daily chart oscillators remain in positive territory, suggesting that the path of least resistance for USD/CAD is to the upside. Therefore, any subsequent decline in USD/CAD could be seen as a long opportunity and maintain support.
