USD/CAD slips back closer to 1.35 mark, focus remains on BOC and Fed minutes

The USD/CAD pair reversed all of its early gains to session highs near 1.3540 region and is now inching back closer to the key 1.35 psychological mark.

The pair's latest leg of downslide could be attributed to a lack of follow through greenback buying interest. In fact, the key US Dollar Index has now drifted into negative territory and failed to assist the pair to extend overnight recovery move from one-month lows. 

Adding to this, optimism over extension of the OPEC-led output cut agreement continues to boost oil prices, with WTI crude oil now moving within striking distance of reclaiming $52.00/barrel mark and provided an additional boost to the commodity-linked currency - Loonie, eventually collaborating to the pair's retracement from higher levels. 

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Meanwhile, repositioning trade, ahead of BoC monetary policy decision and FOMC meeting minutes, could also be one of the factors contributing to the pair's volatile price action on Wednesday. 

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Heading into today's key event risks, traders are likely to refrain from carrying big positions and hence, it would be prudent to wait for a decisive break in either direction before committing to the pair's near-term directional move. 

Technical levels to watch

On a break below the 1.35 handle, the pair now seems to find support near 1.3470-65 area, which if broken would confirm a fresh bearish break down and accelerate the slide towards 1.3435-30 horizontal support en-route 1.3400 round figure mark. Conversely, a sustained move above session tops resistance near 1.3540 level might trigger a short-covering rally towards the 1.3600 handle before the pair eventually heads towards testing its next resistance near 1.3645-50 region.