USD/CAD flirts with 1.2450 on sluggish oil prices, awaits Fed’s Powell, BOC’s Mecklem

• USD/CAD pokes intraday high, rejects extending the previous day’s pullback.
• Market sentiment wobbles as Fedspeak emphasize tapering.
• Oil prices struggle on US SPR concerns, mild risk-off mood.
• Comments from Fed Chair Powell, BOC Governor Macklem will be the key.

USD/CAD picks up bids to 1.2445, following the previous day’s mild losses, amid Tuesday’s Asian session. In doing so, the Loonie pair justifies the pullback in oil prices and small intraday losses of the S&P 500 Futures that underpin the US dollar rebound of late.

WTI crude oil prices fade two-day recovery, recently sluggish around $82.00. The black gold eased after US Energy Secretary Jennifer Granholm said on CNN’s “State of the Union” on Sunday that President Joe Biden is looking at the Strategic Petroleum Reserve (SPR) release, in order to reduce gas prices.

The oil benchmark also struggles amid mildly offered S&P 500 Futures, down 0.10% by the press time. Market sentiment sours amid the Fed tapering tantrums, recently propelled by the Fedspeak and firmer US inflation expectations.

That being said, various Fed policymakers ranging from Vice-Chairman Vice-Chair Richard Clarida to Charles L. Evans, the Chief Executive Officer of the Federal Reserve Bank of Chicago, conveyed hopes of tapering and positive catalysts for the rate hike during their latest appearance.

It’s worth noting that anxiety over the Fed reshuffle and uncertainty over US President Biden’s $1.75 trillion stimulus also challenge the market’s mood, helping the US Dollar Index (DXY) to consolidate recent losses.

Moving on, speeches from Fed Chairman Jerome Powell and Bank of Canada (BOC) Governor Tiff Macklem will be crucial to forecast short-term USD/CAD moves. Also important will be the weekly oil inventory data from the industry source, namely the American Petroleum Institute (API).

While the Fed tapering is already a much-debated subject, rate hike concerns are in focus to back the US dollar. On the other hand, BOC’s Mecklem needs to reiterate the bullish bias if he is to safeguard the USD/CAD bears.

Technical analysis

Although sustained trading above the four-month-old horizontal support, near 1.2420-25, keeps USD/CAD buyers hopeful, the 200-DMA level of 1.2475 guards the quote’s immediate upside.