USD/CAD remains in red near mid-1.22s post-EIA, Fed meeting eyed

The USD/CAD pair dropped to a fresh 2-day low at 1.2235 in the early NA session and is now struggling to make a meaningful recovery ahead of the important FOMC meeting. As of writing, the pair was trading at 1.2250, losing 0.35% on the day.

Despite a quick crude oil sell-off, the commodity-sensitive loonie remains resilient against the greenback as investors are reluctant to take large positions before the Federal Reserve releases its monetary policy decisions and the updated economic projections report.

Earlier in the session, the EIA released its weekly report, which showed that commercial crude oil inventories in the U.S. increased by 4.6 million barrels for the week ending September 15, coming in higher than the market estimate of 3.5 million barrels. Although the barrel of West Texas Intermediate plummeted to a session low at $50.14 right after the data, it quickly gained traction and is now trading at $50.70, gaining 1.6% on the day. 

• EIA: US commercial crude oil inventories increased by 4.6 mln barrels
• WTI ignores EIA report, stays near highs around $50.50

The US Dollar Index has been spending the last couple of hours in a tight range around mid-91s. "Most economists and analysts suggest that the focus will be on the commencement of the balance sheet roll off in October while the trajectory of FOMC dot points will also attract some attention. In addition, they expect the Fed to likely leave the interest rates unchanged at 1.25%, while they do not expect any major changes to the statement," Sandeep Kanihama, an editor at FXStreet, wrote in his report titled, "FOMC Preview: 13 major banks expectation from September meeting."

Technical outlook

On the upside, 1.2300 (psychological level/daily high) is the first critical resistance ahead of 1.2410 (Sep. 6 high) and 1.2465 (50-DMA). On the downside, supports align at 1.2200 (10-DMA/psychological level), 1.2120 (Sep. 15 low) and 1.2060 (Sep. 8 low).