• USD/CAD sellers are attacking the previous resistance line from early January.
• Failures to break through the 78.6% Fibonacci retracement, the pessimistic RSI favors the bears.

USD/CAD remains under pressure around an intraday low of 1.2771 as it jostles with resistance turned support heading into Friday’s European session.

The Loonie pair rallied to a two-month high the previous day, but couldn’t stay much beyond the 78.6% Fibonacci retracement (Fibo.) of the December-January decline.

The pullback, however, is fighting the previous resistance line, as well as the 61.8% Fibo. level, near 1.2770-65.

Given the quote’s inability to stay above the key Fibonacci retracement level and the sloping, non-oversold RSI line, USD/CAD is likely to decline further.

However, a clear break of 1.2765 becomes necessary before the bears can target 50% Fibo. level near 1.2700. Next, the 200-SMA around 1.2660 will be a tough nut to crack for USD/CAD sellers.

On the contrary, a sharp upside break of the 78.6% Fibonacci retracement level of 1.2866 must be validated against the last swing high around 1.2880 to direct USD/CAD bulls towards the December high. 2021, close to 1.2965.

On the upside, the round number 1.2900 may offer an intermediate halt while the psychological magnet of 1.3000 could lure pair buyers past 1.2965.

USD/CAD: four-hour chart

Trend: further weakness expected