USD/CAD spikes to 1.28 handle but lacks follow-through

   •  CAD weighed down by a rise in Canadian trade deficit/retracing oil prices.
   •  Disappointing US economic data now seemed to cap additional gains. 

The USD/CAD pair built on its steady recovery move from over 1-month lows and spiked to the 1.2800 handle during the early NA session. 

The pair caught some fresh bids following a larger than expected jump in Canadian trade deficit, coming in at -$2.7 billion as compared to -$2.00 billion expected and -$1.94 billion recorded in the previous month. This coupled with a modest retracement in crude oil prices weighed on the commodity-linked currency - Loonie and further collaborated to the pair's spike in the past hour or so. 

The supportive factors, to some extent, was offset by disappointing US economic data, showing a larger than expected jump in weekly jobless claims and trade deficit figures for Feb., which although did little to dampen the prevailing bullish sentiment around the US Dollar but kept a lid on any further up-move.

With today's economic data out of the way, focus now shifts to Friday's official monthly jobs report, popularly known as NFP, which would now be looked upon for some fresh directional impetus.

Technical levels to watch

Any follow-through up-move is likely to confront resistance near the 1.2835-40 region, above which a fresh bout of short-covering could assist the pair to aim towards reclaiming the 1.2900 handle.

On the flip side, the 1.2760 level now seems to protect the immediate downside, which if broken could accelerate the fall towards 50-day SMA support near the 1.2725 region en-route the 1.2700 handle.