USD/CAD snaps 3-days of winning streak, weaker around mid-1.2800s

   •  Extends overnight retracement slide from levels beyond 1.29 handle. 
   •  Weaker USD/US bond yields were seen as key factors weighing on the major. 
   •  Retracing oil prices does little to influence demand for commodity-linked Loonie.

The USD/CAD pair traded with a negative bias through the early European session and is currently placed at fresh session lows, just below mid-1.2800s.

A mildly softer US Dollar tone, led by weaker US Treasury bond yields, was seen as one of the key factors behind the pair's follow-through retracement from previous session's swing high level of 1.2924.

Comments by Mexican Economy Minister Ildefonso Guajardo, saying that he does not see NAFTA deal before May 17, prompted some aggressive selling around the Canadian Dollar on Tuesday and helped the pair surge past the 50-day SMA hurdle, and the 1.2900 handle. 

Meanwhile, the prevalent negative trading sentiment around crude oil prices, which tends to weigh on the commodity-linked currency - Loonie, did little to lend any support, with the USD/US bond yield dynamics acting as key determinants of the pair's momentum on Wednesday.

It would now be interesting to see if the pair is able to attract dip-buying interest, especially after its overnight bullish breakthrough a technically important moving average. 

On the economic data front, the US housing market data and the EIA's weekly US oil inventories data would now be looked upon to grab some meaningful trading opportunities.

Technical levels to watch

A subsequent retracement back below 50-DMA support, near the 1.2830 region, would negate prospects for any further up-move and turn the pair vulnerable to head back towards retesting the 1.2770-65 horizontal support. 

On the upside, momentum back above 1.2875-80 immediate hurdle now seems to continue lifting the pair further towards testing its next major hurdle near mid-1.2900s and eventually towards reclaiming the key 1.30 psychological mark.