USD/CAD climbs back closer to 1.3200, upside seems limited ahead of Fed decision

• USD/CAD regains positive traction during the Asian session on Wednesday.
• The USD holds steady just below a two-week high and lends some support.
• Bullish Crude Oil prices could underpins the Loonie and cap further gains.
• Traders might also prefer to wait ahead of the crucial FOMC policy decision.

The USD/CAD pair attracts fresh buying following the previous day's good two-way price swings and steadily climbs back closer to the 1.3200 mark during the Asian session on Wednesday. Spot prices, however, remain confined in a familiar trading band held over the past week or so as traders keenly await the outcome of the highly-anticipated two-day FOMC monetary policy meeting, scheduled to be announced later today.

The Federal Reserve (Fed) is widely expected to hike intrest rates by 25 bps. Furthermore, market participants remain scpetic if the US central bank will commit to a more dovish stance or stick to its forecast for 50 bps lift-off by the end of this year. This, in turn, remains supportive of the recent rise in the US Treasury bond yields. Apart from this, signs of an extremely resilient US economy assist the US Dollar (USD) to hold steady just below a two-week high touched on Tuesday and acts as a tailwind for the USD/CAD pair.

In fact, the survey from the Conference Board showed that US consumer confidence increased to a two-year high in July amid a persistently tight labor market and receding inflation. The data raised optimism that the economy could skip a recession this year and acts as a tailwind for the Greenback. That said, the prevalent risk-on environment is holding back traders from placing fresh bullish bets around the safe-haven buck. Furthermore, bullish Crude Oil prices underpins the commodity-linked Loonie and caps the USD/CAD pair.

Investors also seem reluctant and prefer to wait on the sidelines heading into the key central bank event risk. Moreover, the recent range-bound price action points to indecision among traders over the near-term trajectory for the USD/CAD pair. This further makes it prudent to wait for strong follow-through buying before positioning for any further intraday appreciating move.

Technical levels to watch