USD/CAD stuck in a narrow range below mid-1.2300s

The USD/CAD pair struggled for a firm direction and remained confined within a 20-25 pips narrow trading range, below mid-1.2300s, through early European session.

Currently trading around 1.2340 level, the pair has failed to gain any fresh traction despite of a modest pick-up in the US Dollar demand, supported by the latest news that the GOP leaders are circulating proposals to lower the corporate tax and the top individual income tax rates. 

Even the prevalent weaker trading sentiment around crude oil prices, which tends to weigh on the commodity-linked currency - Loonie, did little to help the pair to build on Friday's weaker Canadian macro data-led sharp recovery move from mid-1.2200s.

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Recall that the latest Canadian inflation figures showed headline CPI rose a modest 0.1% inter-month, while Core prices gauged by the BoC remained flat on a monthly basis. Further data saw below estimates retail sales growth, at 0.4% and sales excluding automobiles expanding 0.2% m-o-m.

Moving ahead, speeches by influential FOMC members - New York Fed President William Dudley, Chicago Fed President Charles Evans and Minneapolis Fed President Neel Kashkari, would now be looked upon for some fresh impetus.

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Technical levels to watch

A follow through buying interest beyond 1.2360-70 area now seems to assist the pair to aim towards surpassing the 1.2400 handle before eventually darting towards 50-day SMA hurdle near the 1.2470 region.

On the downside, sustained weakness back below the 1.2300 handle could drag the pair back towards an intermediate support near mid-1.2200s en-route the 1.2200-1.2190 region.