- A combination of factors triggered fresh selling around USD/CAD on Tuesday.
- The decline has now dragged the pair to the downtrend channel support.
- Slightly oversold conditions warrant caution before placing further bearish bets.
USD/CAD continued to lose ground during the first half of the European session and fell to the 1.2320 area, or 3-month lows in the last hour.
A prevailing risk appetite in financial markets triggered aggressive selling around the safe-haven US dollar. Which fell to 3-week lows on Tuesday. In contrast, a further increase in crude oil prices supported the commodity-linked Canadian dollar. And additionally put some downward pressure on the USD/CAD pair.
From a technical perspective, the pair has been trending lower along a downward sloping channel since the September monthly swing highs around 1.2900. While short-term oversold conditions persist, bearish traders may now wait for a sustained break through channel support before placing new bets.
Upon breaking below trend channel support, currently around the 1.2325 region, the depreciation move will be extended. The USD/CAD could be vulnerable to a break below 1.2300 and accelerate the fall towards the next relevant support near 1.2250.
Conversely, any recovery attempt now could face immediate resistance near the 1.2370-75 region. The overnight swing highs in the 1.2400-1.2410 area, if decisively breached, could trigger a short-covering move around the USD/CAD pair.
Nonetheless, any subsequent upside move could still be viewed as a selling opportunity. And additionally risks fading quickly near the key psychological level of 1.2500. The latter represents a confluence barrier comprising the very important 200-day SMA and the upper end of the aforementioned channel.
Today’s Last Price 1.2326
Daily Rate -0.0054
Today’s Daily % Change -0.44
Daily Open 1.238
20 Daily SMA 1.258
50 Daily SMA 1.2614
100 Daily SMA 1.2504
SMA of 200 Daily 1.2505