USD/CAD has extended losses for a second consecutive session, trading around 1.4010 during Asian hours Monday after breaching a key technical support level. The pair broke below its 50-day exponential moving average and is now testing the psychologically significant 1.4000 handle while trading within a descending channel pattern that signals continued bearish momentum.
The breakdown below the 50-day EMA represents a technical shift that could attract additional selling pressure from momentum traders. The descending channel formation suggests sellers remain in control of the pair’s near-term direction. Traders are now watching whether USD/CAD can hold above the 1.4000 level, which has historically provided support, or if a breach will trigger stops and accelerate declines toward lower channel boundaries.
The weakness in USD/CAD reflects either US dollar softness across the board or Canadian dollar strength, likely driven by commodity price movements given Canada’s resource-dependent economy.
FXnCO Insight
Watch for a confirmed break below 1.4000 as a signal to add short positions, with stops above the 50-day EMA.
Source: FXStreet