USDCAD is trending lower as it formed lower highs and lower lows inside a falling channel on its 4-hour chart. This has been holding since July and could continue to keep gains in check moving forward.

Price just bounced off support and appears to be climbing past the mid-channel area of interest on its way to test the resistance. If it holds, price could retreat to the previous lows near the 1.3000 or until the bottom of the channel.

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 gain traction than to reverse. The gap between the indicators remains pretty wide to suggest that a new crossover is not imminent.

Stochastic is pointing up to reflect the presence of bullish pressure, and the oscillator has plenty of room to climb before reflecting overbought conditions. This suggests that buyers could stay in control for a bit longer. RSI is also heading up, so price could follow suit while bullish momentum is present.

There are no major reports due from both the US and Canada today, so the trend might simply carry on. Risk appetite could be the main driver of trends, and stronger demand for higher-yielding assets would likely prove bullish for the Loonie.

Keep in mind, however, that crude oil has taken huge hits so the correlated Loonie could also tumble. Downgraded forecasts for demand from Asia by Saudi Arabia suggests that the cartel could be foreseeing much weaker demand in the future, which would be bearish for the commodity.

Apart from that, geopolitical tensions and negative developments on the pandemic front could also mean selling for the Canadian dollar while buoying demand for the safe-haven Greenback.