USD/CAD quickly reverses a dip to sub-1.25 level

The USD/CAD pair reversed a dip to sub-1.2500 level and quickly recovered around 25-pips from session lows.

A modest pull-back in the US Treasury bond yields, helping the key US Dollar Index to bounce off daily lows, has been one of the key factors behind the pair's tepid rebound from three-day lows.

Further gains, however, are likely to remain capped in wake of a strong rally in crude oil prices, which tends to underpin demand for the commodity-linked currency - Loonie.

Moreover, resurfacing geopolitical concerns seems to have overshadowed December Fed rate hike expectations and has dampened sentiment around the greenback, which might now collaborated towards keeping a lid on any further up-move for the major.

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Traders now look forward to Canadian housing market data and a scheduled speech by Minneapolis President Neel Kashkari for some fresh trading impetus. 

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Technical levels to watch

Immediate resistance is pegged near 1.2530 level, above which the pair is likely to make a fresh attempt towards reclaiming the 1.2600 handle before eventually darting towards its next major hurdle near the 1.2635 region.

On the flip side, sustained weakness back below the 1.25 handle now seems to accelerate the fall towards 1.2450-45 intermediate zone ahead of a strong horizontal support near the 1.2415 region.