USD/CAD holds its gains, trading around 1.3640 during the early European hours on Wednesday. The weakening of the commodity-linked Canadian Dollar (CAD) could be attributed to lower crude Oil prices, given the fact that Canada is the biggest Oil exporter to the United States (US).

West Texas Intermediate (WTI) Oil price trades around $80.30 per barrel at the time of writing. This drop in Oil prices is attributed to the diminished impact of Hurricane Beryl. The storm affected a major Oil-producing region in Texas but caused less damage than initially expected by the markets.

Oil and gas companies resumed some operations on Tuesday. Several ports reopened, and most producers and facilities began ramping up output. However, some facilities sustained damage, and power had not yet been fully restored, according to Reuters.

Additionally, Oil prices may face challenges due to weak consumer demand in China, the world's top crude importer. China's Consumer Price Index (CPI) data showed an annual increase of 0.2% in June, down from a 0.3% rise in May, falling short of the market's forecast of a 0.4% increase. Monthly, inflation declined by 0.2% in June, compared to the previous and expected decline of 0.1%.

Moreover, Federal Reserve Chairman Jerome Powell's testimony before the US Congress on Tuesday. Powell acknowledged improving inflation data but reiterated the Fed's cautious stance. The higher rate would negatively impact the economy of the United States, the largest Oil consumer.

Fed Chair Powell stated, "More good data would strengthen our confidence in inflation." He also noted that "first-quarter data did not support the greater confidence in the inflation path that the Fed needs to cut rates."

Traders anticipate the second semi-annual testimony by Fed Chair Jerome Powell and speeches by the Fed’s Michelle Bowman and Austan Goolsbee on Wednesday. Additionally, attention will be on the US Consumer Price Index (CPI) data, set to be released on Thursday.

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