- USD/CAD drops further to hit three-week lows below 1.2450.
- Bears target 100-DMA at 1.2368 amid renewed downside pressure.
- RSI remains below the midline, allowing room for more declines.
- Key US, Canadian data in focus for fresh direction on the major.
USD/CAD is extending the recent downtrend into the third straight day on Friday, hitting the lowest levels in three weeks near 1.2430, as the selling pressure remains unabated amid a recovery in WTI prices and easing US dollar.
WTI recaptures ground above $73.50 amid a calmer risk tone while the US dollar resumes its downside, fuelled by the dovish Fed stance and a big miss on the US Q2 GDP figure.
Traders now look forward to the US PCE inflation and Canadian GDP data releases for fresh trading opportunities in the major.
From a near-term technical perspective, USD/CAD remains vulnerable, especially after it faced rejection at the 200-Daily Moving Average (DMA) at 1.2605 earlier this week.
The downside momentum picked up pace after the spot closed Thursday below the 21-DMA at 1.2520, which opened floors for deeper declines.
The bears now target 1.2400, below which the horizontal 100-DMA at 1.2368 could come into play.
The 14-day Relative Strength Index (RSI) trades flat but remains below the midline, suggesting that there is room for more declines.
USD/CAD: Daily chart
Alternatively, the bulls need to find acceptance above the daily highs of 1.2472 to recapture the 1.2500 round number.
The price will face resistance at the abovementioned 21-DMA. The next relevant resistance will be then seen at the 1.2550 psychological level.