Technical analysis
The USDCAD pair is bearish after moving back under its 200-day moving average. The early-week move higher appears to have been a false technical breakout.
The daily time frame shows that significant amounts of bearish MACD price divergence has formed. The MACD price divergence extends down towards the 1.2250 level.
What the possible outcomes are
In our most likely scenario, the bearish price trend will remain in place and the USDCAD pair will continue to decline back towards the 1.2250 level over the medium-term time horizon.
Alternatively, the USDCAD pair will stage another technical test back towards its 200-day moving average, above the 1.2600 level, and then start to sell-off again.
Key levels
Support 1.2440 1.2250
Resistance 1.2620 1.2700
