- USD/CAD remained under some selling pressure for the third consecutive session on Thursday.
- Sustained breakthrough a trading range support near the 1.2500 mark favours bearish traders.
- Weakness below the 1.2475 region will set the stage for an extension of the depreciating move.
The USD/CAD pair extended this week's rejection slide from the 1.2625-30 supply zone and witnessed some follow-through selling for the third consecutive session on Thursday. The downward momentum dragged the pair to near four-week lows, around the 1.2475 region during the first half of the European session.
A convincing break below the key 1.2500 psychological level – support marked by the lower boundary of a multi-week-old trading range – was seen as a fresh trigger for bearish traders. However, a modest US dollar rebound helped limit the downside, rather assisted the USD/CAD pair to rebound around 20 pips from daily lows.
Looking at the broader picture, the USD/CAD pair has been trending lower along a downward sloping channel over the past four months or so. This points to a well-established bearish trend. Adding to this, bearish technical indicators on hourly/daily charts support prospects for a further near-term depreciating move.
Hence, any meaningful recovery attempt back above the 1.2500 mark might be seen as an opportunity for bearish traders. This, in turn, should cap the USD/CAD pair near the 1.2525-30 horizontal resistance. That said, some follow-through buying might prompt some short-covering move towards the 50-day SMA, near the 1.2600 mark.
On the flip side, the 1.2475 region now seems to have emerged as immediate support. Sustained weakness below will reaffirm the trading range breakdown and drag the USD/CAD pair towards the 1.2400 mark. The downward trajectory could further get extended and allow bears to challenge YTD lows, around the 1.2365 region.
USD/CAD daily chart
Technical levels to watch
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