USD/CAD struggling near 3-week lows, Canadian retail sales in focus

The USD/CAD pair struggled to gain any fresh traction and was confined within 15-20 pips narrow trading range, around mid-1.2500s.

There were no fundamental triggers for the pair's slide on Monday and was solely led by some renewed greenback selling pressure. The pair, however, has failed to benefit from a broad-based US Dollar recovery on Tuesday and was seen struggling near previous session's 3-week lows. 

A modest uptick in crude oil prices, which tends to underpin demand for the commodity-linked currency - Loonies, seems to have negated a modest pickup in the USD demand. 

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Moreover, investors also seemed reluctant to place any aggressive bets ahead of today's important data - Canadian monthly retail sales report for June, due for release later during the NA trading session, which has eventually led to a subdued/lackluster trading action. 

Against the backdrop of prevalent bearish sentiment surrounding the greenback, even a slightest strong retail sales report will lead to another outside drop in the pair. 

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Technical levels to watch

Immediate resistance is pegged near 1.2580 level, above which the recovery move could get extended even beyond the 1.26 handle towards its next hurdle near the 1.2640-45 region. 

On the downside, sustained weakness below 1.2540 level would turn the pair vulnerable to break below the key 1.25 psychological mark and head towards testing its next support near the 1.2440-30 region.