After yesterday's sharp retracement from one-week tops, the USD/CAD pair struggled to gain any fresh traction and remained capped below the 1.22 handle, despite of a modest US Dollar uptick.
On Thursday, the pair initially spiked to a 5-day high level of 1.2239 in wake of upbeat US economic reports, showing consumer price inflation (CPI) rose more than expected in August and an unexpected decline in the initial jobless claims.
• US CPI: Headline and core inflation strengthen - Wells Fargo
However, a follow through up-move in crude oil prices, supported by Wednesday's bullish IEA report on global oil demand growth, underpinned the commodity-linked currency - Loonie and capped further up-move.
The pair finally settled with marginal losses for the second consecutive session and remained within striking distance of over 28-month lows touched last Friday.
Meanwhile, reemergence of selling interest on every attempted recovery above the 1.2200 handle now seems to suggest that the well established bearish trend still has some more legs to go before the pair eventually bottoms out.
Later during the NA session, a slew of important US macroeconomic releases would now be looked upon for some fresh impetus.
• US Retail Sales Preview - HSBC
Technical levels to watch
On a sustained move beyond the 1.22 handle, leading to a subsequent strength above 1.2230-40 area, might trigger a short-covering bounce towards the 1.2300 mark.
Conversely, weakness back below mid-1.2100s would turn the pair vulnerable to break below the 1.2100 handle and head towards testing its next support near 1.2075 level.
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