USD price action has risen an impressive 3.2% year-to-date according to performance in the US Dollar Index. The astounding ascent recorded by the US Dollar over the last several trading sessions has pushed the DXY Index toward the 100.00 price level and to its highest level since October last year.

US DOLLAR INDEX PRICE CHART: DAILY TIME FRAME (AUGUST 2019 TO FEBRUARY 2020)

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Chart created by @RichDvorakFX with TradingView

Dominance exhibited by the US Dollar is owed in part to traders seeking safe-haven currencies as the novel coronavirus outbreak plagues market sentiment and risk appetite. This fundamental theme has provided a positive tailwind to spot USD/CAD price action considering the correlation between the Canadian Dollar and oil.

That said, outlook for USD/CAD over the short-term likely hinges largely on upcoming releases of FOMC minutes and Canadian CPI data, which are due Wednesday, February 19 at 19:00 GMT and 13:30 GMT respectively.

USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY & TRADING RANGES

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Scheduled event risk surrounding USD/CAD has steered its overnight implied volatility reading to 4.9%, which is above its 20-day average of 4.2%. The uptick in expected currency volatility is observable across other US Dollar currency pairs like EUR/USD which just plunged to its weakest level since April 2017.

Aside from coronavirus fallout, USD price action has also risen significantly on the back of robust US economic data such as monthly nonfarm payrolls. Resilience of the US economy has afforded the FOMC with flexibility to shift away from its dovish posturing last year to a more neutral stance, which has exacerbated US Dollar strength.

USD/CAD PRICE CHART: DAILY TIME FRAME (AUGUST 2019 TO FEBRUARY 2020)

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As such, the US Dollar has the potential to extend its rally considering the likelihood that the upcoming release of FOMC minutes underscore firming monetary policy outlook from the Federal Reserve.

If the latest FOMC minutes reiterate a less-dovish Fed, corresponding strength in the US Dollar might be felt by spot USD/CAD in particular if Canadian CPI and other key inflation indicators tracked by the BoC cross the wires below consensus estimates earlier during Wednesday’s trading session.

This development might send spot USD/CAD prices snapping higher off technical support provided by the 23.6% Fibonacci retracement level of its most recent bullish leg.

On the contrary, a sticky Canadian CPI datapoint could offset possible upside in USD/CAD price action and perhaps cause the major currency pair to extend lower toward its 34-day exponential moving average.

Nevertheless, USD/CAD is estimated to fluctuate within a 68-pip range between 1.3218-1.3286 over the next 24-hours with a 68% statistical probability judging by its overnight implied volatility reading of 4.9%.