EURCAD recently fell through support around the 1.4300-1.4350 level then dipped to a low of 1.4180. Price has since pulled higher and is testing the Fibonacci retracement levels.

The pair is closing in on the 50% Fib around 1.4153 near the former support zone. A larger correction could reach the 61.8% level at the 1.4350 minor psychological mark, which lines up with the 200 SMA dynamic inflection point.

On the subject of moving averages, the 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that resistance levels are more likely to hold than to break. The gap between the indicators is widening to reflect strengthening selling pressure.

At the same time, stochastic is already in the overbought zone to signal exhaustion among buyers. Turning south would signal that sellers are taking over and could take EURCAD back down to the swing low or lower.

RSI is also closing in on the overbought zone to reflect exhaustion among buyers and a likely return in bearish pressure.

The Loonie is on weak footing recently due to sliding oil prices, as the US and China are reportedly gearing up to release more oil reserves into the global market. This is in response to an earlier energy crunch and a bid to stabilize prices, although the OPEC and IEA warned of a possible oversupply from this.

The EIA reported a surprise draw of 2.1 million barrels in stockpiles versus the estimated build of 1.0 million barrels, suggesting that demand remains elevated. After all, businesses are still increasing their purchases of fuel and energy commodities now that more economies are emerging from lockdowns.

Downbeat inflation reports are also weighing on the Loonie, as this could push BOC rate hike bets much later. Headline CPI came in line with forecasts at 0.7% while other versions like the trimmed mean CPI and common CPI fell slightly short of estimates.