USD/CAD sticks to modest gains above mid-1.3200s, lacks follow-through

• USD/CAD gains some positive traction and recovers a part of the overnight slide.
• Weaker oil prices undermined the loonie and remained supportive of the uptick.
• Sliding US bond yields kept the USD bulls on the defensive ahead of the US CPI.

The USD/CAD pair regained some positive traction on Thursday and recovered a part of the previous session's slide to 1-1/2 week lows, albeit lacked any strong follow-through.

The pair stalled its recent corrective slide from four-month tops and managed to attract some dip-buying ahead of the very important 200-day SMA. A weaker tone surrounding crude oil prices undermine demand for the commodity-linked currency – the loonie and extended some support to the major.

Bulls seemed reluctant

Oil prices edged lower on Thursday amid concerns about falling demand on the back concerns over the outbreak of the deadly coronavirus in China, the world's biggest importer. However, the downside remained cushioned, at least for the time being, amid expectations of supply cuts from major oil producers.

Meanwhile, a fresh wave of the global risk-aversion trade led to a modest pullback in the US Treasury bond yields, which eventually kept the US dollar bulls on the defensive. A subdued USD price action seemed to be one of the key factors capping any strong gains for the major.

Hence, it will be prudent to wait for some strong follow-through buying before traders start positioning for the resumption of the prior bullish trend. The focus now shifts to the release of US consumer inflation figures, which might produce some meaningful trading opportunities on Thursday.

Technical levels to watch