USD/CAD consolidates overnight strong gains to over 2-month tops

   •  Overnight rally confirmed a fresh bullish breakout.
   •  Subdued USD demand negated by sliding oil prices.
   •  Traders eye economic docket for fresh impetus.

The USD/CAD pair oscillated in a narrow trading range and was seen consolidating previous session's strong gains to over two-month tops.

The US Dollar rallied hard on Tuesday and assisted the pair to build on its bullish breakthrough the very important 200-day SMA barrier after the new Fed Chair Jerome Powell strengthened the case for a faster monetary policy tightening cycle. 

This coupled with a sharp retracement in crude oil prices further weighed on the commodity-linked currency - Loonie and collaborated to the pair's strong up-move beyond last week's YTD high level of 1.2756. 

However, a combination of diverging forces led to a range-bound/subdued price-action through the early European session on Wednesday. The USD now seems to have entered a bullish consolidation phase, while a follow-through weakness in oil prices continued lending some support and helped limit any deeper corrective slide, at least for the time being.

Today's economic docket, highlighting the release of the second estimate of the US Q4 GDP growth numbers, would now be looked upon for some fresh impetus later during the early NA session.

Technical levels to watch

Bulls would be eyeing for a sustained move beyond the 1.2800 handle, above which the pair seems all set to head towards testing the 1.2850-60 supply zone. On the flip side, any meaningful retracement below 1.2755-50 immediate support is likely to be limited and should find fresh buying interest near the 1.2700 handle (200-day SMA).