USDCAD has been in a downtrend since the May 5 high of 1.3792. After falling from this more than one-year high, the pair touched a low of 1.2911 on July 4 and made a slight correction higher. However, prices are finding it difficult to enter back into the key 1.3000 handle.
The bearish market structure remains intact and there are no signs of a reversal in the trend yet. USDCAD is trading below the 200-day moving average, which asserts a bearish view. Meanwhile the downward sloping 50-day MA is suggesting there is downside pressure in the market.
A further decline from current levels would see a re-test of the July 4 low at 1.2911, which would act as an immediate support level. A break below this could accelerate downside momentum to bring a resumption of the downtrend with scope to target the next support level at the September 7 low of 1.2821 and then from here the June 23 low of 1.2677 would act as another support area.
The daily RSI momentum indicator is attempting to rise out of oversold territory, suggesting that the market could retrace in the near-term or consolidate recent losses. If the RSI continues to move higher and further away from oversold levels at 30, then USDCAD could pick up momentum and rise. But the pair could find immediate resistance at 1.3013 (July 5 high). A successful break above this barrier would bring into view a key psychological level at 1.3200. Another important resistance area is located at the 200-day MA at 1.3340, which capped upside moves on June 21 and 22.
Looking at the daily chart, only a rise above the 200-day MA would change the current bearish bias and bring the market to a more neutral phase. A break above resistance at 1.3550 would shift the bias to a more bullish one.
