USD/CAD holds steady near weekly top as trader keenly await Fed Chair Powell’s speech

• USD/CAD trades with a positive bias for the third successive day on Wednesday.
• Bearish Crude Oil prices continue to undermine the Loonie and act as a tailwind.
• Subdued USD price action caps the upside ahead of Fed Chair Powell’s speech.

The USD/CAD pair attracts some buyers for the third successive day on Wednesday and trades around the 1.3770-1.3775 area, or the top end of its weekly range during the Asian session.

Crude Oil prices add to the overnight slump below a technically significant 200-day Simple Moving Average (SMA) and drop to the lowest level since late July. This, in turn, is seen undermining the commodity-linked Loonie and acting as a tailwind for the USD/CAD pair. The US Dollar (USD), on the other hand, consolidates its strong recovery gains from a multi-week low touched earlier this week and does little to influence spot prices.

The recent sharp pullback in the US Treasury bond yields, along with an extended rally in the US equity markets, turn out to be key factors acting as a headwind for the safe-haven buck amid the uncertainty over the Federal Reserve's (Fed) rate-hike path. In fact, the softer US monthly jobs report for October released last Friday reaffirmed the market view that the US central bank is nearing the end of its policy tightening campaign.

That said, a slew of influential FOMC members this week acknowledged the US economic resilience and kept the door open for additional rate hikes. Hence, the focus remains glued to Fed Chair Jerome Powell's scheduled speech later during the early North American session, which will be scrutinized closely for cues about the next policy move. This, in turn, will drive the USD demand and provide a fresh impetus to the USD/CAD pair.

In the absence of any relevant market-moving economic releases, either from the US or Canada, traders will further take cues from Oil price dynamics to grab short-term opportunities. Nevertheless, the fundamental backdrop seems tilted in favour of bulls and supports prospects for an extension of the USD/CAD pair's positive move witnessed over the past three days, from the 1.3630-1.3625 region, or a near three-week low touched on Monday.

Technical levels to watch