USD/CAD keeps just below 1.2300 to start European morning trade

The pair extended its downside push yesterday, capitalising on the central bank divergence theme as the dollar tumbled across the board as well.

The Fed kept a more dovish stance and with the BOC starting to taper, it continues to drive further interest in the loonie – not to mention booming commodity prices.

As things stand, the break lower this week now sees USD/CAD look to target the lows seen in late-January to early-February @ 1.2247-56. A firm break below that will shift the focus towards support from the 2017 low next @ 1.2055.

A look at the monthly chart spells out the more evident push lower in the pair since peaking in March last year:

USD/CAD M1 29-04

Of note, sellers look set to seal a break below the 100-month moving average (red line) for the first time since 2013.

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