USDCAD flipped backwards after its bullish efforts fizzled out just beneath July’s top of 1.3222, with the price plunging towards the key 1.3026 level ahead of Canada’s employment report early on Friday.
The momentum indicators have all changed direction to the downside, endorsing the negative momentum in the price. However, with the RSI holding above its 50 neutral mark and the price facing support around the key 1.3026 level, where the 20-day simple moving average (SMA) resides, sellers may wait for another decisive close lower before taking further action. Notably, the 200-weekly SMA is also positioned in the same location.
Should the bears claim the 1.3026 mark, the pair may next seek shelter somewhere between the 50-day SMA at 1.2950 and the 1.2900 constraining zone. A continuation lower could then retest the tentative ascending trendline around 1.2830, while the 200-day SMA beneath at 1.2780 may come immediately to the rescue if downside pressures persist.
In the positive scenario, where the 20-day SMA puts a floor under the price, the 1.3115 restrictive region could immediately come under examination. Crossing that bar, the bulls may again attempt to snap July’s high of 1.3220, though only a goodish run above the ascending line at 1.3265, which joins the 2021 and 2022 peaks, would reinforce confidence in the slow-progressing long-term uptrend.
To summarize, although technical signals are deteriorating in USDCAD, traders may wait for an extension below 1.3026 to confirm a bearish bias.
