• Struggles to build on last week’s up-move amid renewed USD weakness.
• Bullish oil prices further benefitting commodity-linked Loonie.
• Positive US bond yields lending some support and help limit downside.
The USD/CAD pair lacked any firm directional bias and extended its consolidative price action through the early European session on Monday.
A combination of factors failed to provide any fresh impetus, with the pair now seen consolidating last week's sharp recovery move the 1.2700 neighborhood. Ahead of a crucial vote on the long-awaited US tax cut legislation, the US Dollar bulls remained on defensive and failed to provide any fresh bullish impetus.
Adding to this, the prevalent bullish trading sentiment around crude oil prices underpinned the commodity-linked currency - Loonie and further collaborated towards keeping a lid on any further up-move.
Meanwhile, a goodish pickup in the US Treasury bond yields helped limit deeper losses and has eventually led to a range-bound/subdued price action at the start of a new trading week.
With the only scheduled release of second-tier data - Foreign Securities Purchases from Canada and the US NAHB Housing Market Index, today's economic docket lacks any major market-moving economic releases. Hence, the pair seems more likely to remain confined within a narrow trading range.
Technical levels to watch
Immediate resistance remains near 1.2880 level, above which the pair is likely to make a fresh attempt to reclaim the 1.2900 handle and head towards testing 1.2915 supply zone.
On the flip side, 1.2840-30 area might continue to protect the immediate downside, which if broken might drag the pair back below the 1.2800 handle towards its next support near mid-1.2700s.
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