USD/CAD retakes 1.21 handle and beyond ahead of Canadian jobs data

The USD/CAD pair has managed to recover early lost ground to the lowest level since May 2015 and is now holding with modest recovery gains beyond the 1.2100 handle.

The pair's goodish recovery of around 60 pips from lower level could be attributed to receding greenback selling pressure. In fact, the key US Dollar Index bounced off 33-month lows near the 91.00 handle and might have prompted traders to cover some of their aggressive short positions. 

This coupled with a modest pull-back in crude oil prices was also seen weighed on the commodity-linked currency - Loonie and further collaborated to the pair's rebounded from the vicinity of mid-1.2000s. 

Meanwhile, repositioning trade, ahead of the Canadian monthly jobs report, might have also contributed rebound to the 1.2120 region. Apart from the Canadian data, the Baker Hughes rig count data would also be looked upon for some impetus later during the NY session.

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Technical levels to watch

A follow through recovery beyond 1.2130 level could trigger a short-covering rally towards the 1.2200 handle with some intermediate resistance near 1.2170-75 zone. On the downside, weakness back below the 1.2100 handle might now find some immediate support near 1.2070 level, below which the pair is likely to aim towards testing the key 1.20 psychological mark.