USD/CAD extends retreat towards 1.2665 as Oil recovers

Having found support once again near 1.2700 levels, the Canadian dollar extends its recovery mode against its American counterpart in the European session, knocking-off USD/CAD back towards 5-DMA support located at 1.2665.

Focus on Oil ahead of EIA inventory report

After a brief phase of consolidation, oil prices attempted a minor-recovery, which offered the much-needed respite to the resource-linked Loonie.

The USD/CAD pair continues to trade near four-week tops, as the renewed strength seen in the US dollar across the board combined with risk-off trades, spurred by escalating geopolitical tensions between the US and North Korea, continue to weigh on the higher-yielding CAD.

Later today, the oil-price action will drive the sentiment around USD/CAD, as focus shifts towards the Canadian housing starts and building permits data due on the cards in the NA session.

USD/CAD Technical levels                

To the topside, a daily close above 1.2700 mark would shift risk in favor of a re-test of 1.2730 (classic R2/ Fib R3) beyond which 1.2750 (psychological levels) would be back on sight. A break below 1.2664 (5-DMA) would open doors for 1.2595 (10-DMA). A break lower would yield a test of 1.2565 (20-DMA).