USD/CAD steadies near two-week lows below 1.3950 ahead of key US data

• US Dollar Index stays in red for fourth straight day.
• WTI rebounds above $14 ahead of weekly EIA data.
• Coming up: US first-quarter GDP data and FOMC's policy announcements. 

The USD/CAD pair closed the first two days of the week in the negative territory and continued to push lower with the recovering oil prices providing a boost to the commodity-sensitive CAD. After touching its lowest level in two weeks at 1.3926, the pair has gone into a consolidation phase and was last seen trading at 1.3950, losing 0.3% on a daily basis.

After the weekly data published by the American Petroleum Institue (API) on Tuesday showed a smaller-than-expected increase in the US crude oil inventories, the barrel of West Texas Intermediate continued to erase the losses it suffered on Monday. Moreover, optimism surrounding the easing of coronavirus-related restrictions in major economies helps the WTI preserve its strength. At the moment, the WTI is up 5.5% on the day at $14.05.

Attention shifts to US GDP data and FOMC announcements

Meanwhile, the greenback is having a tough time finding demand for the fourth straight day on Wednesday. Ahead of the US Bureau of Economic Analysis' first estimate of the first-quarter GDP data and the FOMC monetary policy announcements, the US Dollar Index is down 0.22% at 99.75.

Previewing the FOMC meeting, “one thing we do not expect at this meeting is a move to negative rates," said ABN AMRO analysts. "Analysis and commentary published by Fed officials has consistently signalled opposition to negative interest rates in the US, and we do not expect that calculus to have changed.”

Technical levels to watch for