USD/CAD drops to fresh session lows, inching back closer to 1.24 handle

   •  Fails to gain traction despite goodish USD rebound.
   •  Subdued oil prices offset by weaker US bond yields.
   •  Wednesday’s BOC announcement holds the key.

The USD/CAD pair erased early modest recovery gains to mid-1.2400s and has now drifted into negative territory for the fourth consecutive session.

Despite a goodish US Dollar rebound, the pair struggled to gain any strong traction and dropped to fresh session lows in the last minute. The latest leg of downslide during the early NA session followed today's disappointing release of the US Empire State Manufacturing Index.

Meanwhile, a softer tone around crude oil prices, which tends to dent demand for the commodity-linked Loonie, was largely negated by weaker US Treasury bond yields and did little to lend any support to the major.

It would be interesting to see if continues to find some support near the 1.2400 handle as investors start repositioning themselves for the next big event risk - BOC monetary policy decision, due to be announced on Wednesday. 

Technical levels to watch

On a convincing break below the 1.2400 handle, the pair is likely to accelerate the fall towards 1.2355 level (monthly low) before eventually dropping to the 1.2300 round figure mark.

Alternatively, a sustained move beyond mid-1.2400s might now trigger a short-covering bounce and lift the pair back beyond the key 1.25 psychological mark en-route its next hurdle near the 1.2545 region.