Bank of America Global Research discusses USD/CAD technical outlook and flags a scope for a bounce towards 1.2250/1.24 in the medium-term.
"In line with our 2021 year ahead technical views, USD/CAD has reached the low 1.20s. Now the question is whether it will breakdown to confirm a big double top with potential for multi-year downside just like the secular potential building in commodities. In the short term, USD/CAD is digesting oversold RSI conditions and bouncing from the bottom of its downward sloping channel. The bottom of this channel, the 2017 lows and 50% Fibonacci retracement all point to strong support at/just above 1.20," BofA notes.
"In the medium term, the trend is at its deepest RSI oversold level since 2007 implying a strong downtrend but risk of a bounce to 1.2250/1.24 is getting high," BofA adds.