USD/CAD turns lower, headed back to 1.3100 handle

Having posted a session peak at 1.3142 level, the USD/CAD pair ran through fresh offers and has now dropped to fresh session low.

Currently trading with bearish bias for the sixth consecutive session, around 1.3115 region, the pair failed to gain any respite from a corrective slide in oil prices, which tends to dent demand for the commodity-linked currency - Loonie, albeit has helped it to defend 1.3100 handle for the time being. In fact, WTI crude oil retreated over 1.0% on Wednesday and has slipped to mid-$52.00 level. 

Meanwhile, a subdued US Dollar price action, ahead of the much awaited Fed monetary policy decision, has also failed to lend any support and restrict the pair's ongoing slide to nearly two-month lows. 

Moving ahead, today's FOMC rate decision takes the centre stage and would be a key determinant for the pair's near-term trajectory. Ahead of the key event, US economic docket, featuring the release of monthly retail sales and PPI print, might provide some short-term trading opportunities, while oil market dynamics would continue to contribute towards the pair's price-action on Wednesday. 

Technical levels to watch

On a sustained weakness below 1.3100 handle, the pair is likely to head towards testing the very important 200-day SMA support near 1.3075 region. On the flip side, decisive move above 1.3140 immediate resistance now seems to trigger a short-covering rally immediately towards 100-day SMA resistance near 1.3195-1.3200 region with some intermediate resistance near 1.3165 level.

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