USD/CAD reclaims 1.2900 as oil retraces ahead of EIA report

Retracement in crude oil prices, back to $46.00/barrel mark, during early NA trading session helped the USD/CAD pair to move reclaim above 1.2900 round figure mark. 

Recent upsurge in crude oil prices, on speculation of a fresh agreement on output freeze, had benefitted commodity-linked currency - loonie. However, on Wednesday oil tipped lower as expectations of production freeze faded after Iran signaled little interest in such a deal, which seems to be weighing on the Canadian Dollar.

Moreover, a broad based greenback recovery, ahead of the release of FOMC meeting minutes, is also assisting the pair trade in positive territory after seven consecutive days of declines and build on to its rebound from 8-week low touched on Tuesday. 

In the meantime, today's EIA report on US crude oil inventories will provide immediate momentum play for short-term traders.

Technical levels to watch

On a sustained move above 1.2900 handle, the pair seems to immediately dart towards 100-day SMA resistance near 1.2935, above which the recovery momentum is likely to gather pace and accelerate the up-move immediately towards 1.3000 psychological mark.

On the flip side, weakness back below 1.2860 level would negate possibilities of any near-term recovery and attract fresh selling pressure, dragging the pair back towards 1.2800 round figure mark before extending the slide further towards its next major support near 1.2735-30 region.