USD/CAD clings to gains, around 1.2700 handle amid notable USD demand

The greenback inched higher across the board, helping the USD/CAD pair to move back above the 1.2700 handle and recover part of Friday's dismal US CPI-led slide. 

On Friday, the pair retreated sharply from 4-week highs and tumbled around 100-pips on softer US inflation figures. The selling pressure, however, abated near mid-1.2600s and the pair regained traction at the start of a new trading week. 

A broad based US Dollar recovery, backed by a goodish up-move in the US Treasury bond yields helped limit losses and has been one of the key factors driving the pair higher. 

This coupled with weaker trading sentiment around oil prices, with WTI crude oil flirting with lows near mid-$48.00s, was also seen denting demand for the commodity-linked currency - Loonie, and further collaborated to the pair's move back above the 1.2700 handle.

   •  WTI flirting with session lows near $48.60

In absence of any major market moving economic releases on Monday, the pair remains at the mercy of broader market sentiment surrounding the USD and oil price dynamics ahead of this week's important releases - the US monthly retails sales on Tuesday and Wednesday's FOMC meeting minutes.

Technical levels to watch

On a sustained move back above 1.2715 level, the pair is likely to aim towards surpassing Friday's s wing high resistance near mid-1.2700s before darting towards the 1.2800 handle. On the flip side, 1.2665-60 zone now seems to protect the immediate downside, which if broken could accelerate the fall towards the 1.2600 mark en-route its next support near mid-1.2500s.