USD/CAD well bid above 1.27 handle, Canadian CPI holds the key

   •  Bulls regain control amid reviving USD demand.
   •  Subdued oil price-action does little to influence.
   •  Focus shifts to the latest Canadian inflation figures.

After yesterday's volatile swing, the USD/CAD pair regained traction on Friday and is now making a fresh attempt to build on its momentum beyond the very important 200-day SMA hurdle. 

The pair had a good two-way move on Thursday, initially jumped to a 2-month high level of 1.2756 after disappointing Canadian retail sales data but sold off rather dramatically later in the day. 

A fresh wave of US Dollar selling bias, primarily led by falling US Treasury bond yields, prompted some profit-taking at higher levels. Adding to this, a sharp uptick in crude oil prices underpinned the commodity-linked currency - Loonie and further collaborated to the pair's retracement of over 85-pips from fresh 2018 tops. 

With oil prices consolidating overnight gains, a goodish pickup in the USD demand helped the pair to hold its neck above the 1.2700 handle. Currently hovering around the 1.2720 region, traders now look forward to the latest Canadian inflation figures, due for release during the early NA session, for some fresh impetus.

Expectations are already running low and the yearly headline CPI is expected to have eased in January, with a slight disappointment might now pave the way for an extension of the pair's near-term bullish trajectory.

Technical levels to watch

Yohay Elam, Analyst at FXStreet writes: “The big lines to watch are C$1.2920, the triple-top that was seen in late 2017, followed by the round number of $1.3000. On the downside, the January high of $1.2590 is the immediate support line, followed by $.12450 and $1.2250.”