USD/CAD trying to build on yesterday’s sharp recovery move

The USD/CAD pair oscillated within 30-pips narrow trading range and was seen building on overnight sharp rebound from 2-1/2 month lows.

The pair on Wednesday plunged below the 1.3200 handle amid broad based US Dollar sell-off in wake of softer US CPI and retail sales data, before recovering sharply on perceived hawkish Fed statement. 

Adding to this, a fresh leg of downfall in oil prices, with WTI crude oil tumbling to one-month lows, further weighed on the commodity-linked currency - Loonie, and collaborated to the pair's recovery from the lowest level since late Feb.

A follow through weakness around oil markets and a modest up-tick in the greenback demand helped the pair to hold with minor gains above mid-1.3200s.

With market seems to have digested recent hawkish rhetoric by the BoC Governor Stephen Poloz echoed Deputy Governor Carolyn Wilkins, traders now look forward to the US economic docket for some fresh impetus in the post-FOMC trading action. 

Technical levels to watch

A strong follow through buying interest above 1.3270-75 region is likely to accelerate the recovery towards the 1.3300 handle en-route 1.3325-30 area. On the flip side, 1.3235-30 region now becomes immediate support to defend, which if broken could drag the pair back below the 1.3200 handle towards retesting yesterday's swing lows support near 1.3160 level.