USD/CAD holds with modest gains, just above mid-1.2900s

   •  A follow-through USD upsurge helps stall overnight retracement.
   •  Rallying oil prices underpin commodity-linked Loonie and cap gains.
   •  Traders now look forward to the economic docket for fresh impetus.

The USD/CAD pair continued with its consolidative price action and remained confined within a narrow trading range below yesterday’s 1-1/2 month tops, around mid-1.2900s.

The pair on Tuesday finally broke out of over 2-week old trading range and surged to the 1.30 neighborhood amid persistent US Dollar buying interest, albeit failed near the key psychological mark after the US President Donald Trump's announcement to pull out from an international nuclear deal with Iran. 

A combination of diverging forces did little to provide any fresh impetus, with a follow-through USD upsurge helped limit any further retracement. The positive factor, to a larger extent, was negated by a strong rally in crude oil prices, which was seen underpinning the commodity-linked currency - Loonie and eventually led to a range-bounce price action through the early European session on Wednesday. 

It would now be interesting to see if bulls are able to regain their dominant position or resort to taking some profits off the table, especially after the pair's latest leg of up-move since the beginning of this week. 

Today's economic docket, featuring the release of Canadian building permits and US Producer Price index would now be looked upon for some fresh impetus later during the early NA session.

Technical levels to watch

Any meaningful up-move might continue to confront immediate resistance near the 1.30 handle, above which the pair is likely to head towards testing 1.3045 intermediate hurdle en-route the 1.3100 round figure mark. 

On the flip side, the 1.2945-40 zone, followed by the 1.2910-1.2900 area now seems to protect the immediate downside, which if broken might prompt additional weakness back towards 50-day SMA near the 1.2840 region.