USD/CAD in search of a firm direction, stuck in a range around mid-1.2900s

   •  Subdued USD demand fails to provide any fresh directional impetus.
   •  Retracing crude oil prices also failed to influence commodity-linked Loonie.
   •  The key focus will remain on the latest FOMC monetary policy update.

The USD/CAD pair struggled for a firm direction and seesawed between tepid gains/minor losses through the early European session on Wednesday.

The pair continued with its subdued trading action for the second consecutive session and remained confined in a narrow trading range around mid-1.2900s. A subdued US Dollar price action, this time led by a modest retracement in the US Treasury bond yields, failed to provide any meaningful impetus. 

Adding to this, crude oil now seems to have entered a bullish consolidation phase near four-year tops and also did little to influence demand for the commodity-linked currency - Loonie. 

Meanwhile, investors' reluctance to place any aggressive bets uncertainties surrounding the North American Free Trade Agreement (NAFTA) and ahead of the key event risk - the highly anticipated FOMC decision further collaborated to the pair's range-bound price action.

Market participants keenly await the latest monetary policy update by the Fed, where clues over the next rate hike move will play a key role in determining the next leg of directional move. 

Technical levels to watch

Immediate resistance is pegged near the 1.2970-75 region and is followed by the key 1.30 psychological mark, above which a bout of short-covering could lift the pair further towards 1.3040 supply zone.

On the flip side, the 1.2935-30 region now seems to protect the immediate downside, which if broken might turn the pair vulnerable to slide back below the 1.2900 handle towards testing 200-DMA support near the 1.2865 area.