• USD/CAD gained some positive traction on Wednesday, though lacked any follow-through.
• Bullish oil prices underpinned the loonie and capped the upside amid sustained USD selling.
• Investors now await OPEC+ decision and the US ADP report before placing directional bets.

The USD/CAD pair refreshed daily high during the first half of the European session, though struggled to capitalize on the move beyond the 1.2700 mark.

Following a brief consolidation through the early part of the trading on Wednesday, the USD/CAD pair attracted some buying and for now, seems to have snapped two days of the losing streak. That said, bullish crude oil prices continued underpinning the commodity-linked loonie and capped the upside amid the prevalent US dollar selling bias.

Oil prices held steady near the seven-year high touched last week and remained well supported by expectations about a limited production increase by major oil producers. Adding to this, the conflict between Russia and the West over Ukraine further acted as a tailwind for the black gold ahead of the OPEC+ decision later this Wednesday.

On the other hand, the US dollar was weighed down by less hawkish comments by Fed officials, pushing back against markets bets for a 50 bps rate hike in March. This was seen as another factor that held back traders from placing aggressive bullish bets and kept a lid on any meaningful gains for the USD/CAD pair, at least for now.

Market participants now look forward to headlines coming out of the OPEC+ meeting. This, along with geopolitical developments, will influence oil price dynamics and provide some impetus to the USD/CAD pair. Traders will further take cues from the release of the US ADP report on private-sector employment for some short-term opportunities.

Technical levels to watch