USD/CAD bounces off 2-week lows, back above 1.26 handle

The USD/CAD pair extended overnight slump and slipped below the 1.26 handle, to its lowest level in nearly 2-weeks during the early European session. 

On Wednesday, the pair started correcting following the release of EIA report on US crude oil inventories. The pair accelerated the slide after the minutes from the Federal Reserve's monetary policy meeting on July 25th & 26th faded optimism over one more possible rate hike action in 2017, on concerns over the slowdown in inflationary pressure. 

The pair continues to be weighed down by a modest uptick in crude oil prices, which tends to benefit the commodity-linked currency - Loonie, with the pair reversing nearly 200-pips from over one-month highs but still trying to defend the 1.2600 handle. 

Meanwhile, the post-FOMC minutes US Dollar selling pressure seems to receded and the bulls trying to hold its neck above the 1.2600 handle ahead of the second-tier economic data, due for release later during the NA session.

Today's economic docket features the release of Canadian manufacturing sales along with the US data - weekly jobless claims, Philly Fed Manufacturing Index, industrial production.

Technical levels to watch

On a sustained weakness below 1.2580-70 zone, the pair is likely to accelerate the fall back towards the key 1.25 psychological mark en-route its next important support near the 1.2435-30 region. Meanwhile, on the upside, any up-move might now confront immediate resistance near 1.2660 level, above which a bout of short-covering could lift the pair beyond the 1.2700 handle, back towards multi-week highs resistance near 1.2755-60 area.