USD/CAD sticks to minor recovery gains, but remains capped below 1.26 handle

The USD/CAD pair trimmed some of its tepid recovery gains and retreated around 25-30 pips from the 1.2600 neighborhood touched earlier today. 

The pair struggled to build on overnight recovery move from 3-week lows amid some renewed greenback selling bias in wake of the US President Trump comments over the Mexican border wall funding. In fact, the key US Dollar Index eroded part of previous session's strong recovery gains and has been one of the key factors failing to assist the pair gain any strong follow through traction. 

This coupled with a modest recovery in oil prices, with WTI crude oil paring early losses was seen lending support to the commodity-linked currency - Loonie and collaborated to the pair's pull-back to the 1.2575-70 region.

From a technical perspective, reemergence of fresh selling pressure on every recovery attempts clearly seems to indicated that the long-term bearish trend might still be far from over. 

Next on tap would be the US economic docket, featuring the release of flash manufacturing & services PMIs, followed by new home sales data and crude oil inventories data would now be looked upon for some fresh impetus during NA session.

Technical levels to watch

Immediate support is pegged near mid-1.2500s, below which the pair is likely to break below yesterday's swing lows support near 1.2525 level and head towards the key 1.25 psychological mark.

On the upside, sustained move beyond the 1.2600 handle might trigger a short-covering bounce towards 1.2660 horizontal level before the pair eventually darts towards reclaiming the 1.2700 round figure mark.