USD/CAD eases back to 1.27 handle ahead of Canadian CPI

Haresh Menghani FXStreet

• Once again fails to sustain above 200-DMA hurdle.
• Weaker oil prices did little to inspire bulls.
• Canadian CPI eyed for fresh directional impetus.

The USD/CAD pair retreated few pips from session tops but has still managed to hold with modest daily gains, above the 1.2700 handle.

The pair did move back within striking distance of yesterday's 2-month tops but once again failed to build on its momentum beyond the very important 200-day SMA. The US Dollar trimmed some of its early gains and was seen as one of the key factors capping further gains.

Meanwhile, a weaker trading sentiment around crude oil prices, which tends to undermine demand for the commodity-linked currency - Loonie, did little to influence the price-action, with the USD price dynamics acting as an exclusive driver through the mid-European session.

Moreover, traders also seemed reluctant to place aggressive bets ahead of today's important Canadian macro data - the latest inflation figures. Against the backdrop of Thursday's weaker Canadian retail sales, even a slight disappointment should prompt some fresh selling around the domestic currency and help the pair to build on its recent bullish momentum.

Apart from the key Canadian data, speeches from influential FOMC members might also provide some short-term momentum play on the last trading day of the week.

Technical levels to watch

Immediate resistance is pegged near mid-1.2700s, above which the pair seems all set to extend the bullish trajectory towards reclaiming the 1.2800 handle. On the flip side, weakness below the 1.2700 mark is likely to find support near 1.2670 level, below which the pair could drop back to 100-day SMA support near the 1.2625 region.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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