USDCAD has been trading back and forth the 20-day simple moving average (SMA) over the last month, failing to improve the bullish view in the short-term. The pair rebounded off the six-year low of 1.2012 and is creating higher highs and higher lows; however, the technical indicators are mirroring the latest weak momentum.
The MACD oscillator dived below its trigger line but is still in the positive region, while the RSI is ticking lower above its neutral threshold of 50. The Ichimoku cloud has been rising with the market action over the last more than three months.
In the event the bulls take control, the 1.2810 level will come first into view. A violation at this point may see another challenging battle around the eight-month high of 1.2950 before running towards the 1.3175 barrier.
Should the bears dominate, driving the price below the 20- and 40-day SMAs, the spotlight would shift to the crucial 200-day SMA around the 1.2490 support, where any step lower will take the pair until 1.2420 and the 1.2200 inside swing high from May 12. The upside bias would also face a serious deterioration if the decline extends below 1.2012.
To sum up, although USDCAD continues to face unfavorable trend signals in the very short-term, the odds for an upturn seem to grow, with the confirmation expected to come above 1.2950.