USD/CAD bulls manage to defend 1.28 handle ahead of FOMC

   •  Extends overnight retracement from fresh 1-month tops on weaker USD.
   •  Bullish oil prices underpinning Loonie and exert some additional pressure.
   •  ADP report eyed for some impetus ahead of the highly anticipated Fed.

After yesterday's good two-way moves, the USD/CAD pair met with some supply on Wednesday and retested the 1.2800 handle, albeit quickly recovered few pips thereafter.

Despite a strong follow-through US Dollar upsurge, the pair on Tuesday, once again, struggled to build on its momentum beyond the 1.290 handle and was being capped by better-than-expected Canadian monthly GDP growth figures. 

With markets looking past yesterday's upbeat Canadian data, a modest USD retracement from multi-month tops prompted some fresh selling around the major. Adding to this, bullish crude oil prices, which tends to underpin demand for the commodity-linked currency - Loonie further collaborated to the pair's weaker tone.

The pair dropped to an intraday low level of 1.2803 but has managed to quickly rebound around 20-pips as traders now seemed reluctant to place any aggressive bets ahead of the highly anticipated FOMC monetary policy decision. 

Heading into the key event risk, ADP report on the US private sector employment and weekly crude oil inventories data would be looked upon to grab some short-term trading opportunities. 

Today's important data/event should provide the required momentum and assist the pair to decisively break through the 1-1/2 week old broader trading range between the 1.2800-1.2900 handles. 

Technical levels to watch

Bears would be eyeing for a decisive break through the 1.2800 handle, below which the slide could get extended towards 1.2740 intermediate support en-route the 1.2700 mark. On the upside, 1.2865-70 area, followed by the 1.2900 handle might continue to act as an immediate hurdle, which if cleared might trigger a fresh leg of up-move towards the 1.2935-45 supply zone.