USD/CAD struggles to sustain above 1.26 mark, retreats from highs

The USD/CAD pair failed to extend early up-move and retreated around 20-pips from session tops, beyond the 1.2600 handle.

A fresh wave of greenback selling bias, with the key US Dollar Index reversing early gains and drifting into negative territory, has been one of the key factors contributing to the pair's pull-back from higher levels. 

The ongoing US political concerns and doubts over additional Fed rate hike action by the end of this year kept the USD bulls on the defensive and failed to assist the pair to build on early recovery move from two-week lows touched on Friday.

Adding to this, a modest uptick in crude oil prices provided an additional boost to the commodity-linked currency - Loonie and further collaborated to the pair's retracement over the past hour or so. 

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The pair, however, has managed to hold some of its daily gains amid lackluster trading action on Monday and absent fundamental drivers, in terms of any market moving economic releases. 

Technical levels to watch

Bulls would try and defend 1.2565-60 immediate support, which if broken would turn the pair vulnerable to head back towards retesting the key 1.25 psychological mark with some intermediate support near the 1.2520-15 region. 

On the upside, 1.2610-15 area seems to have emerged as immediate resistance, which if cleared might trigger a short-covering rally towards 1.2675-80 zone en-route the 1.2700 handle.