USD/CAD struggles to build on overnight strong gains, eases to mid-1.2900s
| • Bulls fail ahead of 1.30 handle, despite BoC Poloz’s dovish comments.
• Even a modest USD rebound fails to provide any fresh impetus.
• Positive oil prices underpin commodity-linked Loonie and capping gains.
The USD/CAD pair traded with a mild negative bias through the early European session and eroded a part of previous session's strong upsurge.
The pair on Tuesday caught some strong bids and surged over 150-pips in the wake of a dovish sounding speech by the BoC Governor Stephen Poloz, with special mention about the uncertainty over the future of US trade policies.
Bulls, however, struggled to build on overnight strong gains, with the pair failing ahead of the key 1.30 psychological mark amid fading Fed rate expectations, especially after yesterday's in-line US consumer inflation figures.
Meanwhile, the prevalent positive trading sentiment around crude oil prices was seen lending some support to the commodity-linked currency - Loonie and further collaborated towards keeping a lid on the pair's bullish momentum.
Meanwhile, a good two-way US Dollar price action, with the key US Dollar recovering early lost ground and turning positive for the day, extended some support and helped limit any deeper losses, at least for the time being.
Traders now look forward to a duo of US macro reports - monthly retail sales and PPI figures, which along with the weekly EIA crude oil inventories data should provide some fresh impetus later during the day.
Technical levels to watch
Any subsequent retracement is likely to find support near the 1.2910-1.2900 region and is followed by support near 1.2870 level, below which the pair seems to head back towards retesting the 1.2800 handle.
On the upside, the 1.2990-1.3000 region might continue to act as an immediate hurdle, which if conquered might trigger a short-covering rally towards mid-1.3000s en-route the 1.3100 round figure mark.
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