The recent retreat in oil prices has weighed on the loonie while the US dollar kept the high ground across the board. The pair is grinding higher towards the supply zone near 1.27. However, selling pressure is likely to intensify as the US dollar tests the 20 and 30-day moving averages on the daily chart, within a year-long downtrend.
1.2540 is the immediate support and a bearish breakout could further depress the price action.
To the upside, 1.2680 is the hurdle to lift before the bulls could press for a reversal.