USD/CAD keeps the red below one-month tops ahead of US data

The USD/CAD pair traded with a negative bias through the mid-European session on Wednesday and eroded part of previous session's gains to one-month highs. 

Currently hovering around 1.2730-35 band, the pair shrugged off a follow through US Dollar buying interest and is being weighed down by a modest uptick in crude oil prices. The greenback builds on overnight gains led by upbeat US macro data but has failed to provide any fresh bullish impetus for the major. 

Meanwhile, the prevalent positive trading sentiment around oil markets, with WTI crude oil holding comfortably above mid-$47.00s was seen benefitting the commodity-linked currency - Loonie, and has been one of the key factors contributing to the pair's mildly weaker tone.

Despite the pullback, the held comfortably above the 1.2700 handle as investors refrained from placing aggressive bets ahead of the very important FOMC minutes, which would throw some fresh light over the central bank's near-term monetary policy outlook and eventually help investors to determine the next leg of directional move for the major.

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Heading into the key event risk, traders would take cues from today's US economic docket, featuring the release of housing starts and building permits along with crude oil inventories would be looked upon for some short-term momentum play.

Technical levels to watch

A follow through weakness below 1.2720 level might turn the pair vulnerable to break below the 1.2700 handle before eventually dropping to its next major support near the 1.2665-60 region. On the flip side, 1.2755-60 area now seems to have emerged as immediate supply zone, which if cleared now seems to assist the pair to extend its near-term recovery trend even beyond the 1.2800 handle towards 50-day SMA hurdle near the 1.2875 region.