The 1.2400 and low from last week at 1.2387 are the targets

The USDCAD has fallen below the 1.2420 – 1.2430 area (see preview from earlier today outlining the level). This level had a number of swing lows from last month's trading (see chart below).

The break will now look to target the lows from last week, including 1.2400 and 1.2387. The 1.2387 also corresponds with a swing low going back to February 18.

Looking at the daily chart, the USDCAD has been in a consolidation pattern after the sharp rise from the June 2014 low. That move took the price up from a low of 1.0630 to 1.2798. The move higher had oil as the catalyst for the rise. The Bank of Canada also helped with a surprise cut in rates in January.

The oil inventory data today came in much higher than expectations. Nevertheless, crude oil prices are moving back higher after testing and holding support against the 100 and 200 hour MAs and trend line (see blue and green line in the chart below and POST FROM YESTERDAY).

Do crude traders know something we don't know?

If the price of oil can stabilize/move higher, the USDCAD has scope for further selling. It will take some more levels to get below on the downside, but there is room to roam on a corrective move, if the cards fall into place. Watching for the support levels below to provide the clues. If they hold, call off the bears. If they break, look for further downside. Can 1.2000 be tested?