USD/CAD gains traction despite of higher oil prices, BOC in focus

Having managed to defend the 1.3300 handle in the previous session, the USD/CAD pair gained some traction on Wednesday and is currently placed at session tops near 1.3335-40 band.

Traders shrugged off the prevalent bullish sentiment surrounding oil markets, which derives demand for commodity-linked currency - Loonie. In fact, WTI crude oil was seen holding with some minor gains above the $53.00/barrel mark, near 5-week tops, but did little to hinder the pair's tepid recovery move. 

Moreover, market also seems to have largely ignored subdued US Dollar price-action, with a modest rise in the US 2-yr treasury bond yield prompting some short-covering ahead of the key Bank of Canada (BOC) monetary policy decision, and subsequent presser, later during the NA session.

BOC is widely expected to leave its benchmark interest rate unchanged at 0.5%. Investors, however, would be keen to see the central bank's assessment of the economic conditions. Against the backdrop of recent slew of positive Canadian economic figures, which has been suggesting that the economy is building momentum, any hints towards an earlier-than-expected rate-hike action should turn out to be highly supportive for the Canadian Dollar and pave way for further near-term depreciating move for the major. 

Technical levels to watch

From current levels, momentum above 1.3355-60 area (yesterday's high) is likely to lift the pair back towards 1.3385 horizontal resistance ahead of 1.3400 round figure mark.

On the downside, weakness below the 1.3300 handle is likely to take support near 1.3285-80 confluence region, comprising of 100-day and 50-day SMAs. A follow through selling pressure would turn the pair vulnerable to head back towards testing the very important 200-day SMA support near 1.3215 region.