USD/CAD stalls recent recovery move, drops farther below 1.26 handle

The USD/CAD pair snapped four consecutive days of winning streak and stalled its ongoing recovery move from 25-month lows.

Currently trading around the 1.2565 region, testing session lows, the pair has now reversed all of the tepid gains posted in the previous session amid persistent greenback selling bias. In fact, the key US Dollar Index languished around 15-month lows and has failed to help the pair to build on its recovery move further beyond the 1.2600 handle.

The buck remained under some selling pressure after the Wall Street Journal reported that special counsel Robert Mueller empanelled a grand jury to investigate allegations of Russia’s interference in the 2016 elections. Adding to this, fading expectations of additional Fed rate hike action in 2017, on subdued expectations around the US economic growth and receding inflationary pressure, is also seen contributing towards restricting any swift greenback recovery.

Meanwhile, the market seems to have largely ignored weaker crude oil prices, which tends to dent demand for the commodity-linked currency - Loonie, with the USD price dynamics acting as an exclusive driver of the pair's movement through early European session on the last trading day of the week.

Later during the NA session, the closely watched US monthly jobs report (NFP), along with Canadian employment details and trade balance data would now be looked upon for some fresh impetus.

   •  US: NFP report to set the tone for the coming week - ING

Technical levels to watch

From current levels, the 1.2550-45 region is likely to act as immediate support, which if broken could accelerate the fall back towards the key 1.25 psychological mark ahead of 1.2475 horizontal support. On the upside, momentum beyond 1.2580-85 zone now seems to lift the pair back above the 1.2600 handle, and 1.2620 area (yesterday's high), towards its next major hurdle near mid-1.2600s.