USD/CAD recovers part of Friday’s fall back closer to 25-month lows

The USD/CAD pair gained some traction at the start of a new trading week and managed to recover part of Friday's slump back closer to 25-month lows.

On Friday, the pair came under some renewed selling pressure after Canadian GDP showed domestic economy registered growth for the seventh straight month in May and supported the BOC's hawkish decision to raise rates earlier this month. This coupled with the advance US Q2 GDP report, which showed weaker employment cost index and the core PCE numbers weighed heavily on the major.

   •  CAD: Strong GDP figures infused new life - BBH

The pair, however, managed to bounce off the 1.2420-15 multi-month lows support and the pull-back could be solely attributed to a modest US Dollar recovery, which seems to have prompted traders to lighten some of their bearish bets.

It, however, remains to be seen if the pair is able to build on the up-move and move back beyond the key 1.25 psychological mark amid the prevailing bullish sentiment around crude oil prices, which tends to underpin the commodity-linked currency - Loonie. 

   •  Oil: Volatility continues amidst weekend rally in prices - BBH

On the economic data front, today's release of Raw Materials Price Index (RMPI) from Canada, followed by Chicago PMI and pending home sales data from the US would now be looked upon for some trading impetus ahead of this week's slew of important macro data, including NFP.

Technical levels to watch

Immediate resistance is pegged near the 1.25 handle, above which the pair is likely to aim towards surpassing the 1.2570-75 important horizontal barrier and reclaim the 1.2600 handle. On the flip side, 1.2420-15 area remains an immediate strong support to defend, which if broken decisively has the potential to continue dragging the pair further towards 1.2345 intermediate support en-route the 1.2300 handle.