USD/CAD retreats from 2-week tops, surging oil prices capping gains

   •  A modest USD pull-back prompts some profit-taking.
   •  Surging oil prices underpin commodity-linked Loonie.
   •  Today’s economic data to provide some trading impetus.

The USD/CAD pair erased majority of its early gains and quickly retreated around 30-40 pips from two-week tops touched in the last hour.

The pair encountered some resistance near 100-day SMA, just ahead of the 1.2600 handle, and a modest US Dollar retracement seems to be one of the key factors capping the pair. 

A weaker tone around the US Treasury bond yields failed to assist the greenback to build on its early gains and prompted some profit-taking, especially after the recent up-move of nearly 250-pips from previous week's over three-month lows. 

Adding to this, the latest leg of an upsurge in oil prices, with WTI crude oil touching $64.00 mark for the first time since December 2014, extended some support to the commodity-linked currency - Loonie and further collaborated to the pair's sharp retracement over the past hour or so.

Further downside, however, remained cushioned by the NAFTA setback, while BOC rate hike prospects might continue to keep a lid on strong up-move and might eventually lead to a range-bound price action ahead of today's economic releases. 

Technical levels to watch

The 1.2530-25 region might continue to protect the immediate downside, below which the pair is likely to challenge the key 1.2500 psychological mark before eventually aiming to test the 1.2435 support. 

On the upside, the 1.2590 region (100-day SMA) remains an immediate strong hurdle, which if conquered could extend the short-covering bounce further towards the 1.2665-70 supply zone.