USD/CAD Price Analysis: Shift of auction below 200-EMA signals more downside

• A recovery in the oil price and risk appetite theme have impacted the Lonnie asset.
• USD/CAD is auctioning below the 200-EMA which indicates weakness ahead.
• A slippage into the 20.00-40.00 range by the RSI (14) will trigger a bearish momentum.

The USD/CAD pair has turned sideways after a sheer drop from the round-level resistance of 1.3600. The Loonie asset is hovering around 1.3540 and is likely to remain highly volatile amid a recovery in the risk appetite theme and oil prices.

The US Dollar Index (DXY) witnessed a sell-off on Thursday after a rebound in the risk-perceived assets and an escalation in the number of weekly Initial Jobless Claims. Also, a recovery in oil price from $76.75 supported the Canadian Dollar.

On a two-hour scale, the Loonie asset has sensed selling pressure around 1.3600 after failing to regain auction above the upward-sloping trendline plotted from November 16 low at 1.3228. A sell-off in the United States Dollar has pushed the Lonnie asset below the 20-period Exponential Moving Average (EMA) at 1.3565. The major has also shifted its auction profile below the 200-EMA at 1.3579, which indicates that the long-term trend has turned bearish now.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range. A breakdown of the momentum oscillator inside the bearish range of 20.00-40.00, will trigger a downside momentum.

Going forward, a downside break below Tuesday’s low around 1.3484 will drag the asset toward November 22 high at 1.3444. A slippage below the latter will expose the major for more downside towards December 5 low at 1.3385.

Alternatively, a break above Wednesday’s high at 1.3612 will drive the Lonnie asset toward December 23 high around 1.3650 followed by the previous week's high around 1.3704.

USD/CAD two-hour chart