The greenback selling pressure seems to have abated, helping the USD/CAD pair to stage a minor recovery from fresh 14-month lows.
Currently hovering just above mid-1.2600s, just a few pips away from session tops touched in the last hour, a modest pickup in the US Dollar demand helped the pair to bounce off lows. The up-move, however, seemed lacking strong conviction amid fading expectations of a Fed rate hike action in September.
• USD: Cautious stance for the week ahead - Westpac
Moreover, an uptick in crude oil prices, supported by today's stronger than expected Chinese macro data, was further seen lending support to the commodity-linked currency - Loonie and collaborated towards keeping a lid on any meaningful recovery for the major.
• WTI in a bullish phase of consolidation above $ 46.50
Moving ahead, today's releases of Empire State Manufacturing Index from the US and Foreign Securities Purchases data from Canada would now be looked upon for some short-term trading impetus.
However, investors' focus would remain glued to the latest Canadian inflation figures and retail sales data, due for release on Friday, which would now act as a key determinant of the pair's next leg of directional move.
Technical levels to watch
Immediate resistance is pegged near 1.2675 level, above which a bout of short-covering could lift the pair beyond the 1.2700 handle towards an important horizontal hurdle near 1.2745-50 region.
On the flip side, sustained weakness below 1.2640 level now seems to pave way for continuation of the pair's near-term downward trajectory towards 1.2580 intermediate support en-route the key 1.25 psychological mark.
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