USD/CAD extends overnight retracement from closer to 3-1/2 month tops

   •  Broad-based USD weakness prompting additional profit-taking.
   •  The 1.29 handle remains an important barrier to conquer.
   •  Friday’s US/CAD jobs data in focus. 

The USD/CAD pair traded with a negative bias for the second consecutive session and extended its overnight retracement slide from closer to Tuesday's 3-1/2 month highs. 

The pair has repeatedly failed to sustain its strength above the 1.2900 handle and despite Tuesday's dismal Canadian GDP data, might now be headed to the lower end of its weekly trading range. 

Investors looked past Wednesday's stronger-than-expected private sector employment data from the US, with broad-based US Dollar weakness triggering some additional profit taking slide around the major. 

Even a modest pull-back in crude oil prices, which tends to undermine demand for the commodity-linked currency - Loonie, and December Fed rate hike expectations did little to lend any immediate support. 

Meanwhile, investors are likely to refrain from placing aggressive bets and wait for Friday's NFP report as well as Canadian jobs data, which might eventually help limit deeper corrective slide. 

In the meantime, the next Fed chair announcement and the US tax reform bill should infuse some volatility in the markets and provide some short-term trading impetus. 

Technical levels to watch

A follow-through selling pressure has the potential to continue dragging the pair towards the 1.2800 handle, below which the slide could get extended towards 1.2755-50 horizontal support.

On the upside, sustained momentum back above mid-1.2800s could assist the pair to make a fresh attempt towards conquering the 1.2900 handle and head towards testing multi-month highs resistance near 1.2920 level.