USD/CAD looks to be heading lower to the 200 DMA but the RSI is sending us a bullish signal

• USD/CAD drops sharply as risk sentiment turns higher during the US session on Monday.
• The pair is now looking to break support zones to keep the downtrend intact.

USD/CAD 30-min chart

The Canadian dollar strengthened pretty quickly as a flurry of risk-on headlines hit the newswire during the US session. The pair looked has been pretty lacklustre until the news came out that US President Trump was looking to add "back to work" bonuses rather than unemployment benefits. There was also another story that looked more at Fed bond-buying suggesting that there could be more support for the largest employers. 

The USD/CAD pair then moved lower and touched the 13550 level which is a stones throw away from the 38.2% Fibonacci level. Below the current level is also the 200 Simple Moving Average which has acted as a support and resistance zone in the past. 

The Relative Strength Index indicator, however, is throwing up an opposing sign. The signal is called a failure swing and in this case, is bullish. This is when the market makes a higher low wave but the indicator makes a lower low wave and moves into oversold territory. 

Additional levels