USD/CAD strengthens ahead of FOMC decision

Crude Oil prices are undermining the Loonie and USD, with the USD/CAD pair experiencing a mixed trend. The commodity-linked Loonie is undercut as Crude Oil prices continue to rise to almost a three-month high.

The US dollar has stalled its recovery move from the lowest level since April 2022, with profit-taking around the safe-haven buck contributing to the USD/CAD pair’s capping.

The downside for the USD seems limited as traders may refrain from placing aggressive bets ahead of the FOMC policy meeting, which is expected to hike interest rates by 25 bps. Investors remain skeptic about the Fed’s commitment to a more dovish stance or its forecast for a 50 bps lift-off by the end of this year.

The focus will remain on the accompanying policy statement and Fed Chair Jerome Powell’s comments at the post-meeting press conference. In the meantime, the USD/CAD pair is more likely to extend its sideways consolidative price action.

Traders now look to US macro data, such as the Conference Board’s Consumer Confidence Index and Richmond Fed Manufacturing Index, for impetus during the early North American session on Tuesday. The US economic docket also includes the release of the Advance Q2 GDP report on Thursday and the Core PCE Price Index, the Fed’s preferred inflation gauge on Friday.