USD/CAD plummets below 1.37 handle and bounces back

The USD/CAD pair witnessed a sharp reversal and retreated over 70-pips from session tops near 1.3740-45 region touched during early NA session.

Spot met with some strong supply after dismal US CPI figures, which pointed to easing inflationary pressure in the economy and now seems to have dampened expectations of a faster Fed rate-tightening cycle through 2017.

Moreover, lower-than-expected retail sales growth numbers further added to the CPI-led disappointment and further aggravated the selling pressure surrounding the major.

   •  US: Soft data unlikely to knock the Fed off course - ING

Meanwhile, a subdued action surrounding oil markets did little to extend any additional support to the commodity-linked currency - Loonie, and collaborated towards limiting further downslide, at least for the time being. 

The pair has bounced off few pips from session lows and is currently trading around 1.3690 region. It, however, remains to be seen if the pair is able to regain traction or the bounce is only chart driven from closer to weekly lows support near mid-1.3600s.

Technical levels to watch

Any additional recovery back above the 1.3700 handle now seems to confront some fresh supply near 1.3715 resistance, above which the pair seems all set to surpass 1.3750 hurdle and head towards retesting yesterday's swing high resistance near 1.3770.

On the flip side, weakness below 1.3670 level might continue to find some support near 1.3650-45 area, which if broken could accelerate the slide towards its next support near 1.3615-10 zone.