Economy Forex News

USD/CAD: Challenges descending channel support

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  • 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.

USD/CAD

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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.

Technical levels

OVERVIEW
Today’s Last Price 1.2326
Daily Rate -0.0054
Today’s Daily % Change -0.44
Daily Open 1.238

TRENDS
20 Daily SMA 1.258
50 Daily SMA 1.2614
100 Daily SMA 1.2504
SMA of 200 Daily 1.2505

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Michelle D. Madsen

Michelle D. Madsen graduated from the University of Westminster and has been deeply involved in the world of finance ever since. She has worked as a Broadcast Journalist hosting various news shows and informative webcasts about the financial markets. Since 2004 she has also been writing for Metanews daily, her attention to detail, and her in-depth knowledge of the financial markets have led her to cover Foreign Exchange and commodities. The world of finance has changed in the last few years with the introduction and rising popularity of cryptocurrencies. She has in no means been left behind, adding this to her bank of intellect and is now also an expert in cryptocurrencies. For the last ten years, Ms. Madsen has been engaged in the financial market. She has notedly written a great number of incredibly informative reviews for the crypto exchange and forex brokers. Her wealth of knowledge has enabled her to become a leading expert in the field. She continues to inform the public writing up-to-date, thorough reviews for the readers of Metanews as she has for the last decade.
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