USD/CAD hits fresh near two-month tops, around mid-1.2600s

The USD/CAD pair built on last week's strong up-move and spiked to fresh near two-month tops during early NA session on Monday.

Against the backdrop of Friday's weaker incoming Canadian CPI and retail sales data, a strong follow through US Dollar buying interest has been one of the key factors driving the pair higher at the start of a new trading week. 

Meanwhile, a goodish pickup in the US Treasury bond yields provided an additional boost to the already bullish sentiment around the greenback and remained supportive of the pair's up-move to its highest level since late August. 

However, the prevalent positive trading sentiment around crude oil prices, which tends to benefit the commodity-linked currency - Loonie seems to be the only factor keeping a lid on any further up-move for the major.

Investors this week would remain focused on the BoC rate decision on Wednesday, which along with important US macro data - durable goods order and Q3 GDP figures, would help determine the pair's next leg of directional move.

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Technical levels to watch

Currently trading around 1.2640 level, immediate resistance is pegged at the very important 200-day SMA, near the 1.2680 region, above which the pair is likely to dart towards its next major hurdle near 1.2750-60 zone.

On the flip side, 1.2615 level, closely followed by the 1.2600 handle, now seems to protect immediate downside, which if broken could drag the pair back towards 1.2560 intermediate support ahead of the key 1.25 psychological mark.