USD/CAD fades a knee-jerk bullish spike to 1.2170 level

The USD/CAD pair faded a knee-jerk bullish spike and quickly retreated around 25-30 pips from session tops touched last hour.

The US Dollar's strong recovery move, from over 2-1/2 year lows touched on Friday, gained fresh traction during early NA session and provided an additional boost to the pair's modest rebound from sub-1.2100 level. 

Adding to this, a sharp pull-back in crude oil prices further weighed on the commodity-linked currency - Loonie and lifted the pair to fresh session tops near the 1.2170 region. 

Fears that Hurricane Irma could dent US oil demand seems to have negated the positive effect of a statement by oil ministers of Saudi Arabia and the United Arab Emirates that extension of global oil supply cut pact, even beyond March 2018, may be considered.

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Meanwhile, today's upbeat release of Canadian housing starts data also did little to lend any support to the Canadian Dollar, with crude oil price dynamics and broad based USD recovery acting as key determinants of the pair's movement through early NA session on Monday.

The up-move, however, lacked any strong follow through momentum, with the pair quickly falling back to the 1.2140 level despite of a strong positive momentum around the US Treasury bond yields. 

Technical levels to watch

A follow through retracement back below 1.2125 level might continue to find some support near the 1.2100 handle, below which the pair is likely to head back towards retesting yearly lows support near the 1.2060 region before eventually dropping to the key 1.20 psychological mark.

On the flip side, sustained move beyond the 1.2155-60 region now seems to trigger a short-covering bounce and lift the pair beyond the 1.2200 handle towards its next major hurdle near 1.2225-30 zone.