The USD/CAD pair quickly reversed an early European session dip to sub-1.2600 levels and turned positive for the third consecutive session. The pair jumped back closer to over one-week tops set in the previous session, though lacked any follow-through buying.
A softer tone around crude oil prices undermined the commodity-linked loonie and extended some support to the USD/CAD pair. That said, the emergence of some fresh US dollar selling held bulls from placing aggressive bets and capped the upside, at least for the time being.
Looking at the technical picture, the USD/CAD pair, so far, has been struggling to find acceptance above the 1.2625-30 region. The mentioned area coincides with the top boundary of a four-month-old descending channel, which should now act as a key pivotal point.
Meanwhile, technical indicators on hourly charts have been gaining positive traction and just started moving into the bullish territory on the daily chart. The set-up supports prospects for an eventual bullish breakout through the trend-channel and additional gains.
A sustained move beyond might trigger a short-covering move and assist the USD/CAD pair to aim back to reclaim the 1.2700 mark for the first time since March 8. The momentum could further get extended towards the next relevant hurdle near the 1.2740-50 supply zone.
On the flip side, any meaningful pullback should continue to attract some dip-buying and remain limited near the 1.2600-1.2590 region. Some follow-through weakness below the 1.2575-70 region might turn the USD/CAD pair vulnerable to retest the key 1.2500 psychological mark.