USD/CAD inches higher towards 1.25 on dismal Canada data

The USD/CAD pair started to build some bullish momentum in the early NA session after the data from Canada failed to meet the market expectations. As of writing, the pair is trading at 1.2485, up 0.4% on the day.

According to the recent data released by the Statistics Canada, the Industrial Product Price Index (IPPI) decreased by 1.0% in June after rising 0.1% (revised from -0.2%) in May. Moreover, the Raw Material Price Index (RMPI) contracted by 3.7% for the same month and both data came in below the market consensus. Further details of the report revealed that the decline in IPPI and RMPI were caused by lower prices for energy and petroleum products.

• Canada: Industrial Product Price Index declined 1.0% in June

In the meantime, the commodity-sensitive loonie is having a difficult time finding demand as the price for the barrel of WTI remains in the negative territory below the critical $50 mark.

• WTI struggles to extend last week's gains, trades below $50

On the other hand, the US Dollar Index is holding on to its modest daily gains on Monday amid a lack of fundamental catalysts. Later in the session, Chicago PMI and Pending Home Sales data from the U.S. will be looked upon for fresh impetus. At the moment, the DXY is at 93.30, up 0.12% on the day.

Technical outlook

The pair could extend its upward correction if it makes a daily close above 1.2500 (psychological level/10-DMA). Above that hurdle, 1.2570 (Jul. 27 high) and 1.2620 (20-DMA) could be targeted. On the downside, 1.2415 (Jul. 27 low), 1.2365 (Jun. 2, 2015, low) and 1.2300 (psychological level) could be seen as technical supports. The RSI on the H4 chart recently moved above the 50 mark, suggesting that the bullish momentum is building up in the near-term.