USD/CAD flirting with lows near 1.26 handle post data

Having failed to build on early tepid recovery move to mid-1.2600s, the USD/CAD pair ran through fresh offers and has now moved on the brink of breaking below the 1.2600 handle.

Bulls seemed unimpressed with today's upbeat US housing market data, showing both building permits and housing starts bettering consensus estimates and witnessing a sharp rebound in June. The same is evident from the lack of any follow through US Dollar buying interest, which was eventually driving the pair lower.

   •  US: Housing starts in June were at a seasonally adjusted annual rate of 1,215,000

Meanwhile, better-than-expected Canadian manufacturing sales, at 1.1% m/m for May as compared to 0.8% expected, was seen lending support to the Canadian Dollar and collaborated to the pair's retracement back closer to 14-month lows touched in the previous session.

Traders, however, refrained from placing aggressive bets and look forwards to today's official EIA report on the US crude oil inventories, which could now act as the next trigger driving the commodity-linked currency - Loonie, through NY trading session on Wednesday. 

Technical levels to watch

A follow through selling pressure below the 1.2600 handle, leading to a subsequent break below yesterday's swing lows support near 1.2580 level, would turn the pair vulnerable to accelerate the downslide towards 1.2535-30 intermediate support en-route the key 1.25 psychological mark.

On the upside, any recovery attempts might continue to confront some fresh supply near mid-1.2600s, above which the pair could make a fresh attempt to conquer the 1.2700 handle.