- USD/CAD continued losing ground through the first half of the European session.
- Oversold RSI on short-term charts warrants caution before placing fresh bearish bets.
- Attempted recovery beyond the 1.2500 mark might be seen as a selling opportunity.
The USD/CAD pair weakened further below the key 1.2500 psychological mark and dropped to fresh three-year lows during the first half of the European session.
The ongoing bullish run in crude oil prices continued underpinning the commodity-linked loonie. This, along with the heavily offered tone surrounding the US dollar, contributed to the USD/CAD pair’s bearish trajectory.
The overnight bearish break below a one-month-old descending trend-channel support was seen as a key trigger for bearish traders. Hence, the downfall could further be attributed to some follow-through technical selling.
Meanwhile, RSI on hourly charts are already flashing oversold conditions and also moved on the verge of breaking below the 30 mark on the daily chart. This, in turn, warrants some caution for aggressive bearish traders. Hence, it will be prudent to wait for some near-term consolidation or a modest bounce before positioning for any further depreciating move. Nevertheless, the USD/CAD pair seems vulnerable to prolong its well-established near-term downtrend.
On the flip side, attempted recovery might now confront resistance near the 1.2500 mark. Any further move up might be seen as a selling opportunity and remain capped near the channel support breakpoint, around the 1.2535-40 region. That said, some follow-through buying might trigger a near-term short-covering move and push the USD/CAD pair back towards the 1.2600-1.2610 horizontal resistance.
USD/CAD 4-hourly chart
Technical levels to watch
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