USD/CAD flirting with lows, around mid-1.2800s

   •  Persistent USD weakness keeps exerting some downward pressure. 
   •  Bullish oil prices lending additional support to commodity-linked Loonie. 
   •  US tax bill vote, due later today, holds the key. 

The USD/CAD pair lacked any firm directional bias and extended its consolidative price action through the early European session on Tuesday.

The pair has been oscillating in a narrow trading band since the beginning of this week and is currently placed at the lower end of its range, around mid-1.2800s. 

Against the backdrop of persistent US Dollar weakness, the prevalent bullish trading around crude oil prices underpinned the commodity-linked currency - Loonie and was seen weighing on the major.

The downside, however, remained limited as investors now seemed to have turned cautious and refrained from placing aggressive bets ahead of a key Senate vote on the long-awaited US tax overhaul legislation, expected later today.

Ahead of the event risk, traders are likely to look upon the release of US housing market data in order to grab some short-term opportunities.

Technical levels to watch

A follow-through weakness is likely to get extended towards 1.2815 horizontal level, below which the pair is likely to head towards testing 1.2780-75 support. On the upside, 1.2880 level remains an immediate hurdle, which if cleared might now lift the pair beyond the 1.2900 handle towards 1.2915 supply zone.