USD/CAD flirts with session tops, looks to build on momentum beyond 1.2100 mark

The USD/CAD pair refreshed daily tops heading into the European session, with bulls now looking to build on the momentum beyond the 1.2100 mark.

A combination of factors assisted the pair to regain positive traction on the first day of a new trading week and recover a major part of Friday's post-NFP retracement slide from over one week tops. As investors looked past the softer US monthly jobs report, the US dollar found some support from a modest uptick in the US Treasury bond yields. Apart from this, a softer tone around crude oil prices undermined the commodity-linked loonie and acted as a tailwind for the USD/CAD pair.

A little disappointment from the headline NFP print tempered expectations that the Fed will begin tapering its asset-purchase program sooner rather than later. That said, investors remain concerned about rising inflationary pressure and refrained from placing aggressive USD bearish bets. Hence, the focus will remain on the release of the latest US consumer inflation figures, which will be another piece of important macro data that would set the tone for the FOMC meeting on June 15-16.

On the other hand, the Canadian dollar was weighed down by a modest pullback in crude oil prices. This comes on the back of Friday's disappointing Canadian employment details, which extended some additional support to the USD/CAD pair. It, however, remains to be seen if bulls are able to capitalize on the move or continue with their struggle to make it through the 1.2135-40 region amid absent relevant market-moving economic releases on Monday, either from the US or Canada.

Technical levels to watch