- USD/CAD added to its intraday losses and dropped to one-week lows in the last hour.
- A convincing break below the 1.2600 confluence support aggravated the bearish pressure.
- Oversold RSI on the 1-hour chart warrants some caution before placing fresh bearish bets.
The USD/CAD pair witnessed some heavy selling during the early North American session and dived to one-week lows, around the 1.2560 region in the last hour.
A sustained break below the 1.2600 confluence support was seen as a key trigger for intraday bearish traders. The mentioned handle comprised of 100-hour SMA and the lower boundary of over one-week-old ascending channel and should now act as a key pivotal point for the next leg of a directional move.
The USD/CAD pair has now reversed the previous day’s positive move to the highest level in nearly three-week tops, with bulls failing to defend 200-hour SMA. Sustained weakness below might have already set the stage for a further depreciating move amid a softer tone surrounding the US dollar.
Meanwhile, technical indicators on 4-hour/daily charts are yet to confirm a bearish breakdown. Moreover, RSI (14) on the 1-hour chart is already flashing slightly oversold conditions. This, in turn, warrants some caution for aggressive bearish traders and positioning for any further decline.
Hence, any subsequent fall is more likely to find decent support and remain limited near the 1.2550 horizontal support. That said, some follow-through selling has the potential to drag the USD/CAD pair further towards challenging the key 1.2500 psychological mark.
In the meantime, any attempted recovery move now seems to confront immediate resistance near the 1.2580-85 region. This is closely followed by the 1.2600 support breakpoint, which if cleared might trigger a short-covering move and push the USD/CAD pair back towards the 1.2625-30 supply zone.
USD/CAD 1-hour chart
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Techincal levels to watch
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