USD/CAD bounces off 1.37 handle, but higher oil prices capping upside

The USD/CAD pair attracted some fresh buying and has managed to reverse early dip to the 1.3700 handle.

Currently trading around 1.3715 level, off session tops touched in the past hour, the pair turned positive for the third consecutive session and the latest leg of up-move could be attributed to a mild greenback recovery, with the key US Dollar Index paring some of its early losses led by retracing US treasury bond yields.

The pair gained traction despite of a goodish recovery in oil prices. In fact, WTI crude oil held above $46.00/barrel mark but did little to lend any support to the commodity-linked currency - Loonie, albiet did collaborte towards capping the pair below mid-1.3700s (yesterday's swing high).

Meanwhile, the Canadian Dollar was also weighed down by yesterday's disappointing building permits data that recorded a sharp drop of 5.8% during March and added to previous month's contraction of 2.5%. 

The pair has now reversed majority of last Friday's sharp reversal move from 14-month tops and hence, it would now be interesting to see if the pair is able to build on the up-move and trigger a fresh bullish break-out amid growing prospects for an eventual Fed rate-hike action in June.  

In absence of any top-tier economic releases, market focus would remain on the official EIA report on the US crude oil inventories, due later during early NY session. 

Technical levels to watch

Bulls would be eyeing for a sustained move beyond 1.3750 level, above which the pair is likely to make a fresh attempt to reclaim the 1.3800 handle and head towards testing its next hurdle near 1.3855-60 area. On the flip side, retracement below the 1.3700 handle now seems to find strong support near 1.3640 level, which if broken would expose the 1.3600 handle and eventually drag the pair towards its next support near 1.3575-70 region.