USD/CAD edges higher, back above mid-1.2400s

The USD/CAD pair regained some positive traction on Tuesday and recovered part of previous session's retracement slide.

The US Dollar managed to recover some lost ground after the US Senate voted to advance a three-week funding bill to reopen the federal government after a three-day shutdown and provided a minor boost to the major.

However, a modest retracement in the US Treasury bond yields, coupled with the prevailing positive trading sentiment around crude oil prices, which tends to benefit the commodity-linked Loonie, might now contribute towards limiting any further gains. 

Looking at the broader picture, the pair has been consolidating between the 1.24 level on the bottom and the 1.25 level on the top, post-BOC trading range. Hence, it would prudent to wait for a decisive break through the mentioned band before committing to the pair's next leg of directional move. 

There isn't any major market-moving economic data due on Tuesday and hence, the pair seems more likely to extend its consolidative price action ahead of this week's important US macro releases. 

Technical levels to watch

The key 1.25 psychological mark might continue to act as an immediate strong hurdle, above which a bout of short-covering could lift the pair towards 1.2545 horizontal supply zone en-route 100-day SMA barrier near the 1.2585 region.

On the flip side, weakness below the 1.2435 immediate support could get extended towards the 1.2400 handle, which if broken is likely to accelerate the fall back towards the 1.2360-55 strong support.