USD/CAD holds above mid-1.2500s, inching back to 1-1/2 week tops
• CAD weighed down by NAFTA concerns.
• Sharp USD rebound remains supportive.
The USD/CAD pair traded with a mild positive bias for the fourth straight day and might now be headed back towards over one-week tops touched in the previous session.
Despite the China report-led broad-based US Dollar sell-off, the pair on Wednesday rallied hard and surged nearly 160-pips from session lows. A combination of factors, including dismal Canadian building permits data and the NAFTA setback, weighed heavily on the Canadian Dollar and prompted a sharp short-covering rally.
The pair continued gaining some positive traction on Thursday and was being supported by a goodish USD rebound, which go an additional boost after a Chinese government source clarified that media reports could be based on wrong information.
Meanwhile, a subdued action in oil markets, with WTI crude oil consolidating near multi-year tops, also did little to lend any support to the commodity-linked currency - Loonie and stall the pair's uptick through the early European session on Thursday.
It, however, remains to be seen if bulls are able to maintain their dominant position or the pair struggles to break through 100-day SMA barrier amid firm expectations for a BOC interest rate hike move next Wednesday.
On the economic data front, the Canadian New Housing Price Index (NHPI), along with the US PPI print and the usual weekly jobless claims are due for release later during the NA session and would be looked upon for some short-term trading impetus.
Technical levels to watch
Immediate strong resistance remains near the 1.2590 region (100-DMA), above which the pair seem all set to extend the recovery move towards its next major hurdle near the 1.2670 region.
On the flip side, the 1.2535-30 region, closely followed by the key 1.2500 psychological mark now seems to act as immediate support, which if broken might turn the pair vulnerable to head back towards retesting the 1.2400 handle.