The pair was keeping flattish around 1.2640 as risk sentiment waned a little earlier but is now slipping lower as equity losses are pared and oil prices are advancing on the session. The low is touching 1.2616 and that is the lowest since 8 December, a month ago.
So, what's next for the pair?
The loonie was the star performer in the major currencies space last year and it's hard to bet against it once again in 2022. I outlined some thoughts on that here and they still apply.
So, looking over to the technical side of things now, sellers are trying to contest the 100-day moving average (red line) @ 1.2623. Keep below that and the pressure is on to challenge the 8 December low @ 1.2606. This is the key support region in play at the moment for the pair.
If that and the 1.2600 level gives way, that is likely to see further downside momentum towards the 200-day moving average (blue line) next closer to 1.2500.
A lot of this will still depend on the risk mood and oil prices in the days/weeks ahead though. If anything else, I'd argue oil prices will still be a notable tailwind as seen with WTI crude up 0.6% today to $79.40. But just be mindful that much like the loonie, oil sentiment could also easily be impacted by any big risk aversion plays.
In that instance, it can turn out to be a double whammy for the loonie instead.
But for now, USD/CAD sellers are in charge and we'll see if they can look for a further leg to the downside in contesting the technical support region highlighted above.