USD/CAD struggling near 3-week lows, around mid-1.2500s

The USD/CAD pair extended overnight rejection slide from the 1.2600 handle and traded with a mild negative bias for the second consecutive session. 

On Wednesday, a fresh wave of US Dollar selling pressure, led by renewed US political uncertainty following the US President Donald Trump's threat of a government shutdown, failed to assist the pair to build on early tepid recovery move. 

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This coupled with a rally in crude oil prices provided an additional boost to the commodity-linked currency - Loonie and dragged the pair back closer to three-week lows, touched on Tuesday.

The pair held with minor losses through early European session on Thursday and seems to have largely ignored a modest pickup in the greenback demand. 

Tuesday's low of 1.2526 would be the main level to watch in the day ahead. Whether the pair is able to hold the mentioned support or extends its depreciating slide would remain dependent on oil prices and broad market sentiment around the greenback. 

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On the economic data front, there isn't anything relevant due for release from Canada, while from the US, the release of weekly jobless claims and existing home sales data would be looked upon to grab some short-term trading opportunities. 

Technical levels to watch

A follow through selling pressure below multi-week lows support is likely to accelerate the fall towards the key 1.25 psychological mark before the pair eventually drops to retest 1.2440-35 important horizontal support.

On the upside, any up-move beyond 1.2565 level might continue to confront some fresh supply near the 1.26 handle, above which a bout of short-covering could lift the pair towards 1.2660 hurdle en-route the 1.2700 round figure mark.