• Subdued USD price action fails to provide fresh impetus.
• Weaker oil prices help limit immediate sharp downfall.
• US macro data might provide the required momentum.
The USD/CAD pair held on to its softer tone through the mid-European session but has still managed to hold above the 1.2560-55 immediate support.
The pair continued with its struggle to decisively break through the very important 200-day SMA barrier and has been confined with a broader trading range over the past one week or so, with a combination of diverging forces further contributing to a range-bound price action on Wednesday.
A subdued US Dollar price action has failed to provide any fresh bullish impetus. The negative factor, to some extent, was negated by a follow-through weakness in crude oil prices, which tends to weigh on the commodity-linked currency - Loonie, and helped limit any immediate deeper losses.
Looking at the broader picture, the pair's attempted up-move beyond the 1.2600 handle is being sold into but any retracement slide has been finding dip-buying interest ahead of mid-1.2500s. Hence, it would be prudent to wait for a decisive break through the mentioned range before committing to the pair's next leg of directional move.
Today's key focus would be on the incoming US macro data - consumer inflation figures and monthly retail sales data, which might provide the required impetus and determine the pair's next leg of directional move.
Technical levels to watch
On a sustained break below mid-1.2500s is likely to accelerate the fall back towards challenging the key 1.2500 psychological mark en-route 1.2440 strong horizontal support. On the upside, momentum above the 1.2600 handle might continue to confront fresh supply near the 1.2620 region (200-day SMA), above which a fresh bout of short-covering should pave the way for an extension of the near-term trajectory towards reclaiming the 1.2700 handle.
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