USD/CAD pulls away from session highs as oil rises after EIA report

• WTI climbs to fresh 2019 highs after EIA shows large draw in oil inventories.
• US Dollar Index clings to small daily gains.
• Fed is expected to keep the policy rate unchanged at 2.5%.

The USD/CAD pair came under modest selling pressure in the last minutes and eased from session highs as the commodity-sensitive gathered strength on rising crude oil prices. As of writing, the pair was trading at 1.3332, still losing 0.1% on a daily basis.

The weekly data published by the Energy Information Administration today showed that crude oil inventories in the U.S. decreased by 9.6 million barrels in the week ending March 15 and provided a boost to crude oil. The barrel of West Texas Intermediate advanced to its highest level since early November at $59.77 and was last seen trading at $59.50, adding 0.7% on the day.

On the other hand, the US Dollar Index is clinging to small daily gains a little below 96.50 ahead of the FOMC announcements and keeping the pair's losses limited. "We continue to think the Fed is done with rate hikes, but that it will maintain a modest tightening bias in its rate hike projections for as long as the economic outlook remains broadly positive,” ABN AMRO analysts argued previewing the event.

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Key technical levels

The pair could face the initial support at 1.3315 (daily low) ahead of 1.3265 (50-DMA) and 1.3190 (200-DMA). On the upside, resistances are located at 1.3370 (Mar. 15 high), 1.3415 (Mar. 12 high) and 1.3500 (psychological level).