USD/CAD retakes 1.27 handle and beyond, jumps to near four-week tops

After yesterday's brief pause, the USD/CAD pair regained traction on Wednesday and has now moved back above the 1.2700 handle to near four-week highs.

A goodish greenback recovery move, with the key US Dollar Index inching back closer to Friday's stronger NFP-led swing highs to over one-week highs, has been one of the key factors driving the pair higher. 

Today's US economic data showed a big upward revision of the unit labor costs for the first quarter, which is something that the market looked at as supportive of the Fed's gradual monetary policy tightening cycle and provided an additional boost to the US Dollar recovery move.

Meanwhile, the market seems to have largely ignored a big beat from Canadian building permits data for June, and higher revision of gains in May, with broad based greenback recovery acting as an exclusive driver of the pair's up-move through early NA session.

Even the prevalent positive sentiment around crude oil prices, which tends to underpin the commodity-linked currency - Loonie, did little to stall the pair's ongoing recovery move to the highest level since July 14. Later during the NY trading session, the EIA weekly US crude oil inventories data would now be looked upon for some fresh impetus.

Technical levels to watch

Immediate resistance is pegged near the 1.2745-50 region (July 14 high), above which the pair seems more likely to surpass the 1.2800 handle and aim towards testing its next hurdle near 1.2865-70 zone.

On the flip side, retracement back below the 1.2700 handle now seems to find immediate support near 1.2675-70 area, which if broken could drag the pair back towards 1.2625-20 support.