USD/CAD inching back closer to the 1.25 handle

The USD/CAD pair caught some fresh bids on Monday and is now eyeing a move back towards the key 1.25 psychological mark.

With the market looking past Friday's softer US inflation figures, a goodish rebound in the US Treasury bond yields helped the US Dollar to recover its post-CPI losses and has been one of the key factors behind the pair's uptick through early European session. 

   •  US: Inflation optimism distorted - ING

Meanwhile, traders seemed to have largely ignored a strong follow through bullish momentum in crude oil prices, which tends to underpin the commodity-linked currency - Loonie, with the USD price dynamics acting as an exclusive driver of the pair's positive momentum at the start of a new trading week. 

   •  CAD: Amongst worst performers against the USD - BBH

Today's economic docket, featuring the release of Foreign Securities Purchases data from Canada, along with the Empire State Manufacturing Index from the US, would now be looked upon for short-term trading opportunities ahead of BOC's Business Outlook Survey.

Technical levels to watch

Currently trading around 1.2490 area, a follow through momentum beyond the 1.25 handle could lift the pair beyond 1.2520 intermediate resistance towards its next major hurdle near the 1.2560-65 region.

On the downside, 1.2465 level now becomes immediate support to defend and is followed by support near the 1.2435-30 region, below which the pair could drift back towards the 1.2400 handle.