The USD/CAD finally broke out of its Asian session consolidation phase and refreshed session tops in the past hour, albeit remained capped below the key 1.25 psychological mark.
A goodish US Dollar rebound, triggered by the Senate vote to approve a short-term spending bill to fund the government for another three weeks, helped the pair to regain some positive traction on Tuesday.
However, a combination of factors kept a lid on any additional gains and reinforced the pair's post-BOC broader trading range between the 1.2500-1.2400 handle.
A weaker tone surrounding the US Treasury bond yields failed to provide an additional boost to the greenback's recovery move, while the prevalent positive trading sentiment around crude oil prices was seen underpinning the commodity-linked currency - Loonie.
In absence of any major market moving economic releases, traders would now take cues from any fresh headlines coming out of the sixth round of talks on renegotiating the North American Free Trade Agreement (NAFTA), due to take place in Montreal from January 23-29th.
Meanwhile, this week's key macro releases from the US and Canada, including the advance US GDP growth figures along with retail sales Friday’s CPI data from Canada, will also play an important role in determining the pair's next leg of directional move.
Technical levels to watch
A convincing break through the 1.25 handle is likely to accelerate the up-move towards 1.2545-50 supply zone before the eventually darting towards 100-day SMA barrier near the 1.2585 region.
On the flip side, sustained weakness below 1.2440-35 area could drag the pair back towards the 1.2400 handle, which if broken might turn it vulnerable to head back towards retesting the 1.2360-55 support area.
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