USD/CAD sticks to modest recovery gains ahead of BOC

The USD/CAD pair held on to its modest recovery gains through mid-European session, albeit was seen struggling to decisively move beyond the 1.2400 handle.

The pair's uptick on Wednesday lacked any catalyst and could be solely attributed to some short unwinding trade ahead of the key event risk - BOC monetary policy decision later today.

Although the central bank is widely expected to leave its benchmark interest rates steady at 0.75%, but the accompanying policy statement might raise prospects of further monetary policy normalization, especially after the latest blowout GDP figures.

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Mounting geopolitical tension kept the US Dollar on defensive mode, but a modest recovery in the US Treasury bond yields supported the pair's tepid recovery from over 2-year lows. 

However, a follow through bullish traction seen around oil markets, with WTI crude oil inching closer to $49.00 mark was seen lending support to the commodity-linked currency - Loonie and keeping a lid on any further up-move for the major.

   •  WTI extends the upside near $49.00, API eyed

Traders would now take clues from the US & Canadian trade balance data but the key focus would remain on the BOC announcement. 

Technical levels to watch

Momentum beyond the 1.24 handle could get extended towards 1.2425 level, above which a bout of short-covering could lift the pair back towards the key 1.25 psychological mark.

On the flip side, immediate support is pegged near 1.2370 level, which if broken would turn the pair vulnerable to break below Tuesday's swing lows support near 1.2335 and head towards testing the 1.23 handle.