USDCAD neutralized its latest downside correction around the former key support region of 126.87, with the price currently aiming to erase some of its weekly losses.
The momentum indicators are providing little initiative for proper progress as the RSI and the MACD keep hovering around their neutral thresholds. Yet, some optimism remains intact as long as these oscillators move along an ascending trendline.
The bottom line of the Ichimoku cloud, which cancelled the upturn from a 33-month low last week, remains a prime target for the bulls. The 20- and 50-day simple moving averages (SMAs) are flattening in the same neighborhood as well. Therefore, a significant step above that border and into the bullish Bollinger band area is expected to set the stage for a test of the 1.2835 – 1.2900 resistance. If buying pressure persists, the bulls should also rally above the 1.3000 level and close above the cloud in order to convince that the ongoing upside reversal is somethng more than temporary.
If the 20-day SMA blocks the way higher, the pair may revisit the crucial cluster of lows around 1.2625. Failure to rebound here could bring new sellers into the market, with the price likely looking for nearby support at 1.2550 – a restrictive region during 2017- 2018. Moving lower, the 1.2460 – 1.2410 has been a familiar spot for upside corrections in the same period, and it will be closely watched if the sell-off extends.
Summarizing, USDCAD is holding a neutral short-term bias. A decisive move above 1.2765 or below 1.2687 could change the risk accordingly.
