USD/CAD bounces off 4-week lows, recovers back closer to 1.25 mark

The USD/CAD pair trimmed some of its early losses and has managed to recover over 40-pips from 4-week lows touched earlier during the European session. 

Currently trading just below the key 1.25 psychological mark, the pair's recovery move got a minor boost from a larger than expected drop in Canadian industrial production price index (IPPI), coming in at -1.5% for July as against -0.2% expected and -1.1% recorded in the previous month.

Adding to this, a continuous drop in the Canadian raw materials price index (RMPI), for the fourth month in the previous five, further supported the pair's minor uptick during early NA session.

Meanwhile, a subdued action around crude oil prices did little to provide any fresh bullish impetus to the commodity-linked currency - Loonie. This coupled with a modest greenback recovery, with the key US Dollar Index bouncing off 30-month lows further helped the pair to recover some of its early lost ground.

Next in focus would be the release of CB Consumer Confidence Index from the US, which if surprises on the upside could help the pair to aim towards surpassing the 1.25 handle. 

   •  US: Expect steady improvement in Conference Board’s consumer confidence index - Nomura

Technical levels to watch

A sustained recovery beyond the 1.25 mark could get extended towards 1.2520 level (session highs), above which a bout of short-covering could lift the pair beyond 1.2555-60 intermediate horizontal resistance towards reclaiming the 1.26 handle. 

On the downside, weakness below 1.2450-40 area would confirm near-term bearish bias and accelerate the slide towards the 1.2400 handle en-route its next major support near the 1.2360-55 region.