Expectations for a less dovish Fed acted as a tailwind for the USD and extended some support to USD/CAD.
The ongoing bullish run in oil prices underpinned the loonie and kept a lid on any meaningful gains for the pair.
Market participants anticipate to Canadian consumer inflation figures for a few impetus before the FOMC.
The USD/CAD pair bounced around 15-20 pips from the first European session lows and was last seen hovering near the highest end of its daily trading range, slightly below the 1.2200 mark.
A modest downtick within the US Treasury bond yields kept the US dollar bulls on the defensive through the primary half the trading action on Wednesday. However, expectations for a less dovish Fed helped put a tentative floor under the greenback and extended some support to the USD/CAD pair.
Investors now seem to possess started pricing within the prospects for an earlier stimulus withdrawal amid worries about rising inflationary pressure. The concerns were further fueled by Tuesday’s US Producer price level , which rose 0.8% MoM in May and accelerated 6.6% on a yearly basis.