The Canadian dollar surged after the BOC’s aggressive rate hike of 50bp. The pair’s recovery came under pressure at 1.2670.
A bearish RSI divergence shows a loss of momentum in the rally and the ensuing break below 1.2580 acts as confirmation of underlying weakness. A combination of stop losses and momentum selling could further depress the greenback.
An oversold RSI may attract some bargain hunters and 1.2480 is a major level to keep the rebound intact. In fact, its breach could cause extended losses beyond 1.2400.
