• USD/CAD grinds lower after the biggest daily fall in two weeks.
• US dollar pares recent gains ahead of the key FOMC.
• BOC’s Rogers teased higher rates but strong US data, hawkish expectations from Fed challenge further downside.
• US ISM Services PMI, Canadian trade numbers will add to the economic docket for a watch.

Having dropped the most in a fortnight, USD/CAD holds lower grounds near 1.2830 during the initial Asian session on Wednesday as bears take a breather ahead of the key data/events.

The Loonie pair’s pullback on Tuesday could be linked to the US dollar’s consolidation ahead of the Federal Reserve (Fed) monetary policy decision. Also favoring the USD/CAD prices were the comments from the Bank of Canada (BOC) policymaker Carolyn Rogers, not to forget firmer equities.

It’s worth noting, however, that the oil prices fail to cheer softer USD and ended posting daily losses, which in turn restricted the USD/CAD pair’s immediate downside due to Canada’s reliance on oil exports. Also challenging the quote were strong US JOLTS Job Openings and Factory Orders for March.

Moving on, USD/CAD prices are likely to remain pressured amid the pre-Fed anxiety. Though, the south-run will have a bumpy road unless the Fed chose to disappoint markets, either via rate actions or comments suggesting a softer approach to deal with robust inflation.

Other than the Federal Open Market Committee (FOMC), monthly prints of the US ISM Services PMI for April and Canadian International Merchandise Trade data for March will be crucial to watch for short-term directions.

Technical analysis

USD/CAD bears attack a fortnight-old rising trend line, around 1.2835 by the press time, after failing to cross March month’s high of 1.2900 on a daily closing basis. Given the RSI’s pullback from the nearly overbought zone and bullish MACD signals, the Loonie pair is less likely to extend the south-run.