USDCAD continues to trend lower on its 4-hour time frame as price moves inside a falling channel and is testing the resistance. This happens to line up with several inflection points where sellers are likely waiting.

In particular, the channel top coincides with the 61.8% Fib near the 1.2600 major psychological mark and the 200 SMA dynamic inflection point. If sellers return here, the pair could resume the drop to the swing low at 1.2365 or to the channel bottom closer to 1.2300.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to resume than to reverse. Stochastic is also heading down from the overbought zone to reflect a return in selling pressure, and the oscillator has plenty of room to move down before indicating oversold conditions.

RSI is also heading down to indicate that selling pressure is present, so USDCAD could keep following suit until oversold conditions are met.

The Loonie could draw upside pressure from the pickup in crude oil prices stemming from the blockage in the Suez Canal. This could derail global exports of the commodity, which might then spur scarcity among some nations, thereby lifting prices.

There are no major reports due from Canada or the US for the rest of the trading week, but there are some policymakers due to give testimonies. Any significant change in policy bias could lead to big moves for either the Loonie or Greenback, although most of these central bankers have already expressed their views in earlier speeches.

Still, it helps to remember that Powell and a handful of Fed officials have reiterated that there is no need to tighten policy just yet, which puts some downside pressure on the US currency.