• USD/CAD is edging lower ahead of the American session.
• US Dollar Index continues to pull away from multi-month high set on Tuesday.
• WTI extends downward correction, tests critical $80 level.

The USD/CAD pair stays under modest bearish pressure during the European hours on Wednesday with the greenback struggling to find demand ahead of key events. As of writing, the pair was down 0.16% on a daily basis at 1.2445.

DXY turns south on Wednesday

Falling US Treasury bond yields seem to be weighing on the dollar on Wednesday. the benchmark 10-year US T-bond yield, which lost more than 3% on Tuesday, is currently losing 0.5% at 1.572%. Reflecting the USD's poor performance, the US Dollar Index (DXY) is falling 0.25%. Meanwhile, US stock index futures are rising between 0.15% and 0.5% on the day, making it difficult for the dollar to attract investors.

Later in the session, the US Bureau of Labor Statistics will release the September inflation report. Investors expect the Core Consumer Price Index (CPI) to stay unchanged at 4% on a yearly basis. A stronger-than-forecast inflation reading is likely to provide a boost to the greenback in the second half of the day.

In the late American session, the FOMC's September Meeting Minutes will be looked upon for fresh insights regarding the timing and the pace of reduction in asset purchases. Previewing this event, "FOMC Meeting Minutes from the bank's September decision will likely serve as a reminder that the Fed is about to taper in November – boosting the dollar," said FXStreet Analyst Yohay Elam. 

FOMC Minutes Preview: Fed to reiterate taper message, sending the dollar up, stocks down.

On the other hand, the barrel of West Texas Intermediate (WTI) is trading in the negative territory near $80 and helping USD/CAD limit its losses for the time being.

Technical levels to watch for