Low flirts with rising channel confluence support and 200 hour average

• USD / CAD fell to four-day lows during the European session.
• The setup favors bearish traders and supports the prospects for further losses.
• Investors await the release of US consumer inflation figures for further impetus.

USD / CAD extended the previous day’s pullback from four-week highs and witnessed some selling during the first half of the European session on Wednesday. The downward trajectory dragged the pair to four-day lows, around the 1.2415-10 region in the last hour.

The intraday decline was unaffected by a pickup in demand for the US dollar, which drew some support from the rebound in US Treasury yields and a weaker risk tone. The bulls even shrugged off falling oil prices, which tend to undermine the commodity-linked madness.

From a technical perspective, andThe USD / CAD pair was last seen flirting with confluence support comprising the 200 hourly simple moving average and the lower bound of a three-week-old rising channel.. This should now act as a key fundamental point and help determine the short-term trajectory.

Meanwhile, the technical indicators on the day chart maintained their bearish bias and have been gaining negative traction on the hourly charts. This, in turn, supports prospects for an eventual collapse, although traders might be reluctant ahead of US consumer inflation figures.

That said, a sustained breakout below could lead to aggressive technical selling and make the pair vulnerable. The next relevant support is based near the 1.2345 region, below which the downward trajectory could extend further towards 1.2300.

On the other hand, any significant bullish movement now appears to face immediate resistance near the 1.2455-60 region. Some follow-up buying should allow the USD / CAD pair to break above the 200-day mean barrier, near the 1.2475 region, and aim to regain the key psychological mark of 1.2500.

USD / CAD 1 hour chart

Technical levels