USD/CAD eyes FOMC Minutes and Canadian CPI at 3.0% for next directional cue

USD/CAD faces a dual catalyst as traders await the August 19 FOMC Minutes alongside Canadian inflation data that showed headline CPI accelerating to 3.0%, driven primarily by higher energy costs. The Minutes are expected to clarify whether the Federal Reserve is prioritising a cooling labour market, which would support rate-cut expectations and weigh on the dollar, or persistent inflation risks, which would argue for holding policy restrictive and lift USD across the board. On the Canadian side, headline CPI at 3.0% sits at the upper bound of the Bank of Canada's 1-3% target range, reducing the scope for near-term BOC easing and offering the loonie fundamental support, though energy-driven gains may be discounted as temporary. The resulting policy divergence narrative will determine USD/CAD direction. Technically, traders are monitoring the 1.3900 pivot, with resistance layered above toward recent highs and support near 1.3800-1.3860. A dovish-leaning Minutes combined with firm Canadian inflation would favour downside in USD/CAD, while hawkish Fed language could drive a sustained break higher.