USAD/CAD struggles to build on the overnight rebound, consolidates in a range around mid-1.3200s

   •  The USD continues to be weighed down by dovish Fed expectations.
   •  A modest pickup in oil prices underpin Loonie and exert some pressure.
   •  Downside remains limited ahead of the upcoming key event risks.

The USD/CAD pair extended its steady Asian session retreat and is currently placed at the lower end of its daily trading range, around mid-1.3200s.

A combination of negative factors failed to assist the pair to build on the overnight goodish attempted rebound from 100-day SMA, rather prompted some fresh selling near the 1.3280 region. The US Dollar bulls held on the defensive amid dovish Fed expectations, while a pickup in crude oil prices underpinned the commodity-linked currency - Loonie.

Investors expect the Fed to adopt a more cautious stance when it announces the latest monetary policy update at the end of a two-day meeting on Wednesday and was seen as one of the key factors that had been weighing on the greenback in the recent past.

Meanwhile, oil price advanced on Tuesday as investors took cues from the latest US sanctions against Venezuela’s state-owned oil company PDVSA, though renewed US-China trade tensions seemed to cap any runaway rally and helped limit deeper losses for the major.

It would now be interesting to see if the pair is able to attract any fresh buying interest or bears regain control as the focus remains on the high-level US-China trade talks and the highly anticipated FOMC monetary policy update on Wednesday.

In the meantime, today's release of the Conference Board's consumer confidence index, the only highlight from today's relatively thin economic docket, will now be looked upon for some short-term trading impetus later during the early North-American session.

Technical levels to watch