USD/CAD fades a knee-jerk spike to 1.29 handle, quickly retreats from tops

   •  Strong USD rebound helps bounce off the 1.2800 neighborhood.
   •  Bullish oil prices underpin Loonie and seemed to cap gains.
   •  US consumer confidence data eyed for some fresh impetus.

The USD/CAD pair faded a knee-jerk bullish spike to the 1.2900 handle and quickly retreated around 40-50 pips from session tops. 

After an initial fall to an intraday low level of 1.2815, over 2-week lows, the pair gained some positive traction on the back of a strong US Dollar recovery witnessed during the European trading session. 

The up-move, however, ran out of near the 1.2900 mark and was being capped by positive trading sentiment around crude oil prices, which tends to underpin demand for commodity-linked currency - Loonie.

Despite a good two-way move, the pair seemed lacking a firm directional bias and oscillated within a narrowing trading range, possibly forming a bullish falling wedge chart pattern on the 4-hourly chart.

Hence, traders are likely to wait for a decisive break below the 1.2800 handle before positioning for any further depreciating slide in the near-term.

On the economic data front, the release of CB's US Consumer Confidence Index, due for release in a short while from now, would now be looked upon to grab some short-term trading opportunities.

Technical levels to watch

A decisive break below the 1.2800 handle now seems to turn the pair vulnerable to extend the near-term downfall and head towards testing the 1.2700 round figure mark. On the upside, sustained move beyond the 1.2900 handle could lift the pair back towards the 1.2940-50 supply zone, above which a fresh bout of short-covering has the potential to extend the up-move further towards reclaiming the key 1.30 psychological mark.