- USD/CAD looks vulnerable amid dollar weakness.
- Further declines could challenge the key support near 1.2950.
- A bounce in the near-term cannot be ruled out.
USD/CAD extends its six-day losing streak and breaches the 1.3000 level, as the bears look to test the critical support near 1.2950 amid relentless selling seen in the US dollar across the board.
The slide in the major can be partially attributed to the ongoing rally in WTI, backed by upbeat Chinese Manufacturing PMIs, weaker dollar and expectations of a draw in the US crude stockpiles. At the press time, WTI trades at $43.10, up 1.15% on the day.
From a near-term technical perspective, the downtrend in the spot is likely to challenge the bulls’ commitment at the horizontal trendline support (maroon line) seen from December 2019 low, which is near 1.2950.
A daily closing below the latter will validate the rounding top formation, paving way for an extensive sell-off.
Ahead of that, a pullback cannot be ruled since the daily Relative Strength Index (RSI) lies in the oversold territory.
Recapturing the bearish 21-daily Simple Moving Average (DMA) at 1.3210 will be critical to extend the recovery momentum.
USD/CAD: DAILY CHART