USD/CAD surrenders early tepid recovery gains, back below 1.27 handle

   •  US tax bill-led USD up-move losing steam.
   •  Friday’s data continues to underpin CAD.
   •  Sliding oil prices fails to lend any support.

The USD/CAD pair failed to build on early recovery move back above the 1.2700 handle and retreated around 35-40 pips from session tops.

Having posted an intraday high level of 1.2727, the pair surrendered all of its gains and inched back closer to Friday's swing lows touched in the aftermath of upbeat Canadian macro data (employment report and GDP figures). 

With investors looking past the development over the long-awaited US tax overhaul bill, which was finally approved in Senate on Saturday, a modest US Dollar retracement seems to be the only factors prompting some fresh selling at higher levels. 

Meanwhile, retreating crude oil prices, which tends to weigh on commodity-linked currency - Loonie, did little to provide any fresh impetus, with the USD price dynamics acting as an exclusive driver of the pair's movement on the first trading day of the week. 

Currently placed at session lows, around 1.2690-85 band, bears would now wait for a clear break through the 1.2670-65 horizontal support to confirm a bearish double-top chart pattern formation on daily charts and before positioning for any further near-term downside.

Technical levels to watch

A convincing break below the mentioned support would turn the pair vulnerable to head back towards retesting 100-day SMA support, currently near the 1.2570-65 region, with some intermediate support near the 1.2600 handle.

On the upside, the 1.2725-30 region now seems to have emerged as an immediate hurdle, above which a fresh bout of short-covering could lift the pair towards 1.2765 horizontal resistance en-route the 1.2800 handle and 1.2820 supply zone.