USD/CAD erases majority of early losses, trades above 1.3350

The USD/CAD pair stayed relatively quiet near 1.3380 during the Asian trading hours before dropping to 1.3340 area in the European session. However, with the USD showing some resilience against its major peers, the pair staged a rebound and was last seen trading at 1.3360, where it was still down 0.12% on a daily basis.

USD tries to shake off the bearish pressure

The greenback's market valuation continues to impact USD/CAD's movements on Wednesday. Earlier in the day, the US Dollar Index (DXY) dropped to its lowest level in more than two years at 93.40 pressured by the slumping US Treasury bond yields.

Although the DXY rose to 93.70 with the 10-year T-bond yield climbing into the positive territory, it struggled to extend its recovery. At the moment, the index is down 0.2% on the day at 93.53 and the 10-year T-bond yield is losing 0.8%, forcing the pair to stay in the red.

Later in the session, the FOMC will release its policy statement. Investors don't expect the Fed to announce any major changes to its policy outlook but they will be assessing the reasoning behind Tuesday's decision to extend the lending facilities to the end of the year. 

Meanwhile, the barrel of West Texas Intermediate continues to trade in its tight consolidation channel above $41, allowing the pair to react to DXY's fluctuations. The next significant catalyst for the WTI will be the US Energy Information Administration's weekly Crude Oil Stocks Change data that is scheduled to be released at 1430 GMT.

Technical levels to watch for