The USD/CAD pair quickly lost nearly 100 pips and dropped below the 1.25 handle to refresh its session low at 1.2440 after the U.S. and Canada released their GDP growth data. As of writing, the pair is trading at 1.2460, losing 0.76%, or 95 pips, on the day.

Although the preliminary GDP growth data for the second quarter advanced to 2.6% from 1.2% in line with expectations, the greenback came under a heavy selling pressure amid worse-than-expected personal consumption expenditure (PCE) prices, which plummeted to 0.3% in Q2 from 2.2% in Q1, missing the market consensus of 1.2%. Moreover, employment cost index for Q2 eased to 0.5% from 0.8%, suggesting that the wage inflation is having a difficult time increasing.

On the other hand, according to the data released by the Statistics Canada, fueled by an increase in 14 of 20 industrial sectors, the real GDP in Canada grew by 0.6% on a monthly basis in May vs. 0.2% in February and beat the market expectation of 0.2%.

Later in the session, University of Michigan Consumer Sentiment Index will be released before the Minneapolis Fed President Neel Kashkari (a dovish FOMC member) delivers his speech at 17:20 GMT.

Technical outlook

The pair could encounter the initial support at 1.2415 (Jul. 27 low), ahead of 1.2365 (Jun. 2, 2015, low) and 1.2300 (psychological level). On the upside, 1.2500 (psychological level) could be seen as the first technical resistance before 1.2565 (daily high/10-DMA) and 1.2665 (20-DMA).

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