USD/CAD Price Analysis: Momentum loss favors greenback bulls, 1.2600 a potential hurdle

• Loonie bulls have weakened on Negative Divergence.
• The RSI (14) has signaled a loss of momentum, which advocates a bullish reversal.
• The greenback bulls have attacked the 20-EMA at 1.2650.

The USD/CAD pair has given an upside break of consolidation formed in a range of 1.2550-1.2565 in the Asian session. The greenback bulls have gauged a pullback from its monthly low of 1.2518 and are attempting to convert the pullback into a bullish reversal.

Exhaustion in the downtrend is weakening the loonie bulls. The momentum oscillator, Relative Strength Index (RSI) has displayed a loss of downside momentum. The asset formed lower lows continuously while the RSI (14) formed higher lows, which signals that the loonie bulls are out of gas now. Also, a pullback move is supporting the signs of bullish reversal.

On a broader note, the asset is auctioning in a Falling Channel, which signals a continuation of a downside move till the asset finds exhaustion in the same.

The greenback bulls have attacked the 20-period Exponential Moving Average (EMA) at 1.2560 and sustainability above the same will strengthen the greenback further.

A decisive move above the round-level resistance of 1.2600 will drive the asset towards May 30 low at 1.2651, followed by April 26 low at 1.2685.

On the flip side, the loonie bulls could strengthen further if the asset drops below Wednesday’s low at 1.2620. This will drag the asset towards the psychological support of 1.2500. A slippage below 1.2500 will expose the asset to more downside towards January 19 low at 1.2450.

USD/CAD four-hour chart