The USD/CAD pair struggled to sustain early strength beyond the key 1.25 psychological mark and has now dropped to fresh session lows, near the 1.2470 region.
The pair's slide of around 50-pips from monthly highs could be attributed a sharp rally in crude oil prices. In fact, WTI crude oil has now risen to 5-month tops and was seen underpinning the commodity-linked currency - Loonie. This coupled with a modest US Dollar retracement since early European session further collaborated to pair's retracement from four week tops.
Meanwhile, reviving hopes over the US President Donald Trump's ambitious pro-growth economic agenda and growing prospects for an additional Fed rate hike move in 2017 helped limit further losses, with the pair managing to hold its neck above 50-day SMA.
Against the backdrop of yesterday's less hawkish comments by the BoC Governor Stephen Poloz, the current pull-back might still be utilized as an opportunity to initiate fresh long positions.
Investors would now take cues from the final revision of US GDP growth numbers, which along with second-tier US economic releases would provide some fresh impetus later during the NA session.
Technical levels to watch
A follow through weakness below 1.2465 area (50-day SMA) is likely to drag the pair back towards 1.2415-10 horizontal support en-route its next support near the 1.2370-65 region.
On the upside, the 1.25 handle now seems to act as immediate resistance, which if cleared decisively could lift the pair even beyond session tops resistance near 1.2520 level towards its next hurdle near 1.2555-60 zone.