USD/CAD gains positive traction, above 1.23 mark ahead of US ISM

   •  Surging US bond yields underpin USD.
   •  Bullish oil prices capping gains.
   •  US ISM eyed for fresh impetus. 

After an initial dip to sub-1.2300 level, the USD/CAD pair gained some positive traction and was now seen building on overnight rebound from over 4-month lows.

The US Dollar continues to find some support from the ongoing upsurge in the US Treasury bond yields, supported by a hawkish assessment of the latest FOMC monetary policy statement. 

The up-move, however, lacked any strong follow-through momentum as bullish crude oil prices underpinned demand for the commodity-linked currency - Loonie and was now seen capping any additional strength, at least for the time being. 

Looking at the broader picture, the pair has been oscillating within a narrow trading range over the past few sessions and hence, it would be prudent to wait for a decisive break in either direction before committing to the next leg of directional move. 

Currently trading around the 1.2225 region, traders now look forward to the key US ISM manufacturing PMI for some short-term trading impetus. However, Friday's keenly watched NFP data would now play an important role in determining the pair's next leg of directional move.

Technical levels to watch

Momentum beyond 1.2235 level is likely to get extended towards the 1.2375 horizontal resistance en-route the 1.2400 handle. On the flip side, bears would be eyeing for decisive break through the 1.2300-1.2290 region, below which the pair is likely to challenge mid-1.2200s before eventually dropping to the 1.2220-15 support area.