USDCAD has been underperforming over the last sessions, breaking back below the 61.8% Fibonacci retracement level around 1.2385 of the up-leg with the low of 1.2060 and the high of 1.2915. When looking at the bigger picture the pair holds the bearish structure and has been trading lower on the back of US dollar weakness.
Short-term momentum indicators are also pointing to a continuation of the bearish bias. The RSI indicator stands in the negative territory and is pointing south, suggesting further losses. Also, the stochastic oscillator is ready to reach the oversold area and the %K line is attempting a bearish cross with the %D line.
If price remains below the 61.8% Fibonacci mark, it could open the way for the 1.2240 level, which is acting as a major support barrier. A drop below it would reinforce the bearish move in the medium-term and open the way towards the next key level of 1.2060.
On the flip side, in case of a jump above the aforementioned significant Fibonacci level, the pair could hit the 50.0% Fibonacci mark around the 1.2485 level. A break above this level would shift the short-term outlook to a more neutral one as it could take the pair above the 20-day SMA.
Overall, for a resumption of the major medium-term downtrend, USDCAD would need to beat the September 2017 low of 1.2060.