USD/CAD recovers from 2-week lows, retakes 1.26 mark

The greenback gained slightly on Monday, helping the USD/CAD pair to bounce back to the 1.2600 handle and recover part of Friday's losses to two-week lows. 

On Friday, the pair extended its pullback from over one-month highs and accelerated the slide towards mid-1.2500s following the release of mostly in-line with expected Canadian CPI print. This coupled with a strong rally in crude oil prices, coupled with the prevalent bearish pressure around the US Dollar further collaborated to the pair's fall to its lowest level since August 4.

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Meanwhile, a modest pickup in the greenback demand helped the pair to regain some fresh traction at the start of a new trading week. Adding to this, a subdued action around oil markets did little to provide any bullish impetus to the commodity-linked currency - Loonie and remained supportive of the pair's uptick through early European trading session. 

The pair, however, seemed lacking any strong follow through momentum as investors remained cautious ahead of this week's important event risk - the Jackson Hole Symposium. Adding to this, doubts over the US President Donald Trump's pro-growth economic agenda and fading prospects of any further Fed rate hike action by the end of this year might continue to keep a lid on any meaningful up-move for the major. 

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Technical levels to watch

Immediate resistance is pegged near 1.2615-20 area, above which the recovery move could get extended towards the 1.2675-80 region ahead of the 1.2700 handle. On the flip side, 1.2570 level now seems to protect the immediate downside, which if broken is likely to drag the pair towards the key 1.25 psychological mark.