USD/CAD retraces from session peak, still well bid at 1.3150

Having posted a session high at 1.3174, the USD/CAD pair retraced from daily peak amid tepid bounce back in crude oil prices. 

Currently trading around mid-1.3100s, the pair extended its overnight recovery from the very important 200-day SMA following the release of upbeat US manufacturing PMI print. Moreover, an intense selling pressure around the GBP/USD major is also contributing to broad based US Dollar strength. 

Maintaining its strong correlation, a corrective slide in crude oil prices was seen weighing on resource-linked currency - Loonie. However, as crude manages to recover the lost ground, the USD/CAD seems to be losing its upside momentum and has now trimmed nearly 50% of its Tuesday's up-move to the vicinity of 1.3200 handle. 

In absence of any major economic releases on Tuesday, crude oil price dynamics might continue to drive the pair and hence, focus now shifts to API report on US stockpiles, due later today, ahead of the official report on Wednesday. However, Friday's release of non-farm payrolls would remain the key determinant of the Fed's next monetary policy stance and the pair's near-term trajectory.

Technical levels to watch

Immediate downside support is seen at 1.3120 level below which the pair to break below 1.3100 handle and head back towards retesting 200-day SMA support near 1.3070 region. On the upside, bullish momentum above session high resistance near 1.3175 level is likely to get extended towards 1.3200 handle, which if cleared would open room for an immediate up-move towards September daily closing high resistance near 1.3220-25 region.