USD/CAD holds weaker around 1.2400 mark

   •  Subdued USD action prompts fresh selling.
   •  Bullish oil prices add to the downward pressure.

After yesterday's brief pause, the USD/CAD pair came under some renewed selling pressure and hangs closer to last week's over 3-month lows.

The pair did attempt a modest recovery on Monday and was being supported by a strong follow-through US Dollar buying interest backed by the recent hawkish comments from various FOMC members, suggesting at least three interest rate hikes in 2018. 

The recovery move, however, was capped near mid-1.2500s following the release of Bank of Canada’s (BoC) optimistic business outlook survey, which supported the case for a January rate hike move and underpinned the Canadian Dollar, despite NAFTA risks. 

Meanwhile, the ongoing bullish run-up in crude oil prices remained supportive for the commodity-linked Loonie and further collaborated towards keeping a lid on any meaningful recovery for the major.

Currently hovering around the 1.2400 handle, traders might now take cues from today's second-tier economic releases in what could be another lackluster trading session on Tuesday.

Technical levels to watch

Immediate support is pegged near the 1.2375 region and is closely followed by mid-1.2300s, below which the pair is likely to accelerate the fall towards testing sub-1.2300 level.

On the upside, the 1.2445-50 region might continue to cap any recovery attempts, which if cleared now seems to trigger a short-covering bounce even beyond the 1.25 psychological mark towards 1.2530-35 horizontal hurdle.