• A follow-through USD retracement fails to assist build on the recent up-move.
• Bearish sentiment around oil prices undermine Loonie and helped limit downside.
• The latest US inflation figures and Powell’s speech eyed for fresh directional impetus.
The USD/CAD pair extended its consolidative price action for the second consecutive session and remained confined in a narrow trading band, just below 3-1/2 month tops set yesterday.
The pair struggled for a firm direction, with a combination of diverging forces doing little to provide any meaningful impetus and leading to a subdued/range-bound price action through the early European session on Wednesday.
The US Dollar extended its sharp retracement slide from roughly 1-1/2 year tops touched earlier this week and was seen as one of the key factors failing to assist the pair to build on its recent positive momentum beyond mid-1.3200s.
The downside, however, remained cushioned amid the prevalent strong bearish sentiment around oil markets, which tend to undermine demand for the commodity-linked currency – Loonie and eventually extended some support.
After yesterday's plunge of over 7%, WTI crude oil struggled to gain any meaningful traction and remained capped after IEA on Wednesday lowered its demand forecast for OPEC crude oil in 2019 by 300,000 bpd.
Currently trading in neutral territory, around the 1.3235-40 region, market participants now look forward to the latest US consumer inflation figures for some fresh impetus. This followed by the Fed chair Jerome Powell's scheduled speech during the early Asian session on Thursday might play an important role in determining the pair's next leg of directional move.
Technical levels to watch
The 1.3250-60 area remains an immediate strong resistance, above which the pair is likely to aim towards surpassing the 1.3300 handle and test its next hurdle near the 1.3140 region.
On the flip side, the 1.3200 handle is pegged as an immediate strong support, which if broken might prompt some additional long-unwinding trade and accelerate the slide towards the 1.3155 support area.
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