- USD / CAD remained under some selling pressure for the third consecutive session on Thursday.
- The sustained advance of a trading range support near 1.2500 favors bearish traders.
- Weakness below the 1.2475 region will set the stage for an extension of the depreciation movement.
The pair USD / CAD extended this week’s rejection drop from the 1.2625-30 bid zone and witnessed some follow-up selling for the third straight session on Thursday. Bearish momentum dragged the pair to nearly four-week lows around the 1.2475 region during the first half of the European session.
A convincing break below the key psychological 1.2500 level, support marked by the lower bound of a multi-week trading range, was seen as a further trigger for bearish traders. However, a modest bounce in the US dollar helped limit the decline, rather it helped the USD / CAD pair to recover around 20 pips from daily lows.
Looking at the bigger picture, the USD / CAD has been trending downtrend along a downward sloping channel for the last four months or so. This points to a well-established downtrend. Furthermore, bearish technical indicators on the hourly / daily charts support the prospects for a further short-term depreciation move.
Therefore, any significant recovery attempt above 1.2500 could be seen as an opportunity for bearish traders. This, in turn, should limit USD / CAD near horizontal resistance at 1.2525-30. That being said, some subsequent purchases could trigger a short hedging move towards the 50-day SMA near 1.2600.
On the other hand, the 1.2475 region now appears to have emerged as immediate support. Sustained weakness below will reaffirm the breakout of the trading range and will drag the USD / CAD pair towards the 1.2400 level. The downward trajectory could extend further and allow the bears to challenge the yearly lows, around the 1.2365 region.
Daily chart
Technical levels
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