USD/CAD erases early gains, turns flat at 1.2775

After tapping 1.2800 handle, the USD/CAD pair erased all of its early gains and dropped back to last week closing level to currently trade around 1.2775 level.

Maintaining a strong correlation with crude oil prices, a fresh bout of buying interest emerged for the Canadian Dollar after oil managed to stage a recovery from two-week low, from the vicinity of $48.00 mark. 

With all eyes stuck on the outcome of this week's key FOMC meeting and with an empty docket from the US and Canada, the pair is likely to take cues from the recovery momentum surrounding crude oil prices and prevailing risk sentiment.

Technical levels to watch

From current levels, weakness below 1.2750 immediate support is likely to get extended below 1.2700 handle, towards 1.2690-85 support area. On a sustained break below 1.2700 level, the pair is likely to remain vulnerable to retest last week lows support near 1.2650 region.