USD/CAD rebounds from 10-month lows, eyeing 1.2900 mark

The USD/CAD pair traded with a mild positive bias through early European session and extended its tepid recovery from 10-month lows touched on Friday.

The pair last week struggled to register any meaningful recovery and came under some renewed selling pressure near the key 1.30 psychological mark. Against the backdrop of recent BoC hawkish rhetoric, Friday's better-than-expected Canadian employment details and Ivey PMI data provided an additional boost to the Canadian Dollar and dragged the pair to its lowest level since September 2016.

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The pair ticked higher despite steady gains in crude oil prices, which did little to extend any support to the commodity-linked currency - Loonie, with post-jobs data US Dollar demand acting as an exclusive driver of the pair's movement at the start of a new trading week. Friday's upbeat headline NFP print now seems to have convinced market participants that the Fed would continue with its monetary policy normalization for the rest of this year and helped the pair to stage a modest recovery from an important support near mid-1.2800s. 

In absence of any major market moving economic releases on Monday, the USD price-dynamics would continue to be a key determinant of the pair’s movement ahead of the next big key event risks – BoC monetary policy decision and the Fed Chair Janet Yellen’s testimony on Wednesday.

Technical levels to watch

Recovery move beyond the 1.2900 handle is likely to confront immediate resistance near 1.2935 area, which if cleared might trigger a fresh bout of short-covering and lift the pair back towards the 1.30 handle.

On the flip side, bears would be eyeing for a decisive breakthrough 1.2860-50 support, below which the pair is likely to accelerate its bearish trajectory further towards the 1.2800 round figure mark.