USD/CAD challenges 1.3000 ahead of Fed meeting

• The pair extends the leg lower and challenges the 1.30 handle.
• CAD grabs extra wings after Monday’s fresh 2018 lows vs. the buck.
• US FOMC meeting next on tap, with the ‘dots plot’ on top of the agenda.

The Canadian Dollar is extending its upside momentum vs. its American neighbor during the first half of the week, forcing USD/CAD to drop to daily lows around 1.3015/10.

USD/CAD looks to Fed, BoC, CPI

The pair is down for the third consecutive session so far on Wednesday after being rejected from fresh 2018 tops in the 1.3120 region recorded on Monday.

CAD has been gathering extra buying interest following the positive performance of yields in the Canadian 2-year note, which clinched fresh tops around 1.91%, levels last traded in June 2011.

In addition, the selling bias in the buck during the first half of the week remains unabated, with occasional rallies failing to sustain an up move beyond the 90.40/50 area.

In the data space, the pair will be under pressure in light of the imminent Fed meeting, where a 25 bp rate hike is practically fully priced in. However, the centre of attention will gyrate around the ‘dots plot’ and the revised outlook for the economy.

In the Canadian docket, Deputy Governor C.Wilkins is due to speak tomorrow ahead of the release of inflation figures for the month of February on Friday.

USD/CAD significant levels

As of writing the index is losing 0.47% at 1.3011 and a breach of 1.2978 (10-day sma) would expose 1.2927 (50% Fibo of the 2017 drop) and finally 1.2885 (21-day sma). On the other hand, the next up barrier is located at 1.3126 (2018 high Mar.19) seconded by 1.3198 (resistance line off 2016 top) and finally 1.3349 (high Jun.21 2017).