USD/CAD corrects from 7-week tops, retreats below mid-1.3100s

   •  The USD retreats from 17-month tops and prompts some long-unwinding.
   •  The corrective slide seemed rather unaffected by weaker crude oil prices.
   •  Traders now look forward to the US ISM PMI for some fresh impetus.

After an initial uptick to 1.3170 area, the USD/CAD pair met with some fresh supply and has now eroded a part of the previous session's strong up-move to seven-week tops.

On Wednesday, a combination of factors helped the pair to quickly reverse the Canadian GDP-led dip to the 1.3100 neighborhood and rally to the highest level since September 11. 

The post-ADP US Dollar upsurge, coupled a sharp fall in crude oil prices, which tend to undermine demand for the commodity-linked currency - Loonie, supported the positive momentum. 

With oil prices struggling to stage any meaningful recovery, a modest USD retracement from 17-month tops was seen as one of the key factors exerting some downward pressure on Thursday.

Currently trading around the 1.3135-30 region, testing session lows, traders now look forward to the US economic docket, highlighting the release of ISM manufacturing PMI for some fresh impetus.

The key focus, however, will be on the keenly watched monthly jobs reports from the US and Canada, which will play an important role in determining the pair's next leg of directional move.

Technical levels to watch

A follow-through weakness is likely to find support near the 1.3100 handle and is closely followed by 100-day SMA support near the 1.3080-75 region, which if broken might accelerate the slide further towards the key 1.30 psychological mark.

On the flip side, the 1.3165-70 region now seems to have emerged as an immediate strong hurdle, above which the pair is likely to aim towards reclaiming the 1.3200 handle before eventually darting towards the 1.3225 supply zone.