USD/CAD advances to session highs above 1.2960 as markets get ready for FOMC

• Greenback gathers strength ahead of the data.
• WTI fails to stay above $72.
• FOMC is expected to announce a 25 bps rate hike later in the day.

The USD/CAD pair recorded modest gains in the last hour and touched a fresh session top at 1.2966 as the greenback started to gather strength ahead of the critical FOMC meeting. As of writing, the pair was trading at 1.2963, adding 0.08% on the day.

Before the Fed announces its interest rate decision and publishes the monetary policy statement alongside with the updated economic projections, new home sales data will be released in the U.S., which is likely to be ignored by the participants. Nonetheless, the fall witnessed in the GBP/USD pair following the latest Brexit headlines helped the greenback gain traction and the US Dollar Index was last seen at 94.33, where it was up 0.2% on the day.

In the meantime, the commodity-sensitive loonie is struggling to stay resilient against the buck as crude oil prices continue to correct the latest rally. After the API reported a larger-than-expected increase in the U.S. crude oil inventories, the barrel of WTI slipped below $72 and failed to make a decisive recovery. At the moment, the WTI is trading at $71.75, down 0.4% on a daily basis.

Previewing today's FOMC event, “with a 25bp hike in the fed funds rate as good as done, the focus will instead be on the Committee’s signal about the prospects for rate hikes in the coming quarters,” Deutsche Bank said in a recently published report. 

Technical levels to consider

The pair could face the initial resistance at 1.3000 (psychological level) ahead of 1.3040 (50-DMA) and 1.3085 (100-DMA). On the downside, supports align at 1.2940 (200-DMA), 1.2885 (Sep. 21 low) and 1.2820 (May 31 low).