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USD/CAD fails to build on attempted recovery, pares early gains to mid-1.3200s

   •  A modest USD rebound helps build on the overnight bounce from 100-DMA.
   •  Retracing oil prices undermined Loonie and provided an additional boost. 
   •  The uptick remains capped ahead of speeches by influential FOMC members.

The USD/CAD pair surrendered a major part of the early gains to mid-1.3200s and might now be headed towards the lower end of its daily trading range. 

Having touched over one month low level of 1.3180 in the previous session, the pair managed to find some support ahead of 100-day SMA and extend the attempted recovery during the first half of Thursday's trading session.

The uptick was backed by a combination of supporting factors - a modest US Dollar rebound from three-month tops and retracing oil prices, though remained capped amid expectations that the Fed will not hike rates in 2019.

The minutes of the Federal Reserve’s December meeting, released on Wednesday, revealed that many policymakers were in favour of holding rates steady this year and kept a lid on the haven-driven some USD strength.

The downside, however, is likely to remain cushioned on the back of retracing crude oil prices, which gave back some of the previous session's strong gains of more than 5% and undermined the commodity-linked Loonie. 

Moving ahead, today's scheduled speeches by influential FOMC members, including the Fed Chair Jerome Powell, will now be looked upon for some meaningful impetus during the US trading session on Thursday.

Technical levels to watch

On a sustained weakness back below the 1.3200 handle might drag the pair back towards challenging the 100-day SMA support, currently near the 1.3170-65 region, which if broken might pave the way for an extension of the sharp downfall from over 19-month tops. 

On the flip side, the session high level of 1.3250 level now seems to act as an immediate resistance, above which a bout of short-covering could lift the pair further beyond the 1.3300 handle towards retesting 50-day SMA support turned resistance near the 1.3320 region.
 

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