USD/CAD regains positive traction, strengthens further beyond mid-1.3100s

   •  The overnight release of softer Canadian CPI continues to weigh on the domestic currency.
   •  Traders shrug off some renewed USD weakness and rather take cues from weaker oil prices.
   •  Focus remains on today’s important US macro data, especially advance Q4 GDP growth print.

After an initial dip to 1.3140 level, the USD/CAD pair regained some positive traction and was now seen building on the previous session's late rebound from closer to multi-week lows.

In what was seen as a delayed reaction to softer than expected Canadian consumer inflation figures, the pair managed to find some support near the 1.3120 region and was further supported by a goodish US Dollar rebound from three-week lows. 

Meanwhile, a sharp pullback in the US Treasury bond yields, triggered by a fresh wave of global risk-aversion trade amid renewed uncertainty over the US-China trade negotiations, kept a lid on any follow-through USD uptick on Wednesday.

The pair, however, seemed unaffected, rather took cues from a modest pull-back in crude oil prices, which tend to undermine demand for the commodity-linked currency - Loonie, and managed to regain traction from the very important 200-day SMA. 

Currently hovering around session tops, around the 1.3170-75 region, market participants now look forward to the US economic docket, highlighting the release of advance Q4 GDP growth figures and the Fed's preferred measure of inflation - core PCE, for some fresh impetus. 

Technical levels to watch

Any subsequent up-move is likely to confront some fresh supply near the 1.3200 handle, above which the pair is likely to aim back towards challenging 100-day SMA barrier near the 1.3250 region. On the flip side, the 1.3140-30 region might continue to protect the immediate downside, which if broken might turn the pair vulnerable to accelerate the slide further towards testing sub-1.3100 level.