USDCAD dropped to a fresh 2-week low as the pair comes under increasing pressure following a rejection at the 50% Fibonacci retracement level of the downtrend from 1.3793 to 1.2061. RSI is falling and suggesting further downside momentum is expected.
The pair is approaching a key level at 1.2500, this being near the 50-day moving average. A break below this support area would set USDCAD on the path to re-test the September 8 low of 1.2061. From this point, an extension lower would confirm the resumption of the downtrend from 1.3793.
To the upside, immediate resistance is at 1.2718 (38.2% Fibonacci) and then the 50% Fibonacci at 1.2922. This would likely be a challenge to break, but if successful, the market would meet further resistance at a very key psychological level at 1.3000, where the 200-day MA is converging as well. Rising above this area would see a reversal of the bearish phase and shift the market’s focus back to the 1.3793 peak.
In the short-term, downside risks are high. The medium-term outlook also remains bearish.