The USD/CAD currency pair is consolidating its recent losses, trading between minor gains and losses during the early European session on Friday. The pair recently touched its lowest level since June 17 but remains supported above the key psychological 1.4000 mark, aided by factors such as the US Dollar regaining traction due to inflation risks from volatile energy prices and ongoing US Federal Reserve rate hike bets. Additionally, retreating crude oil prices have undermined the commodity-linked Canadian Dollar, providing a tailwind for USD/CAD. Despite these supports, the lack of meaningful buyers suggests caution before confirming the end of the three-day downtrend [1].
From a technical perspective, the breakdown below the 200-period Simple Moving Average (SMA) on the 4-hour chart this week has triggered bearish sentiment. Momentum indicators, including the MACD below zero and the RSI near 37, indicate that downside momentum remains dominant. Analysts suggest waiting for follow-through selling and acceptance below the 1.4000 mark before positioning for deeper losses. If this occurs, USD/CAD could weaken to the 38.2% Fibonacci retracement at 1.3979, with further downside targets at 1.3897 and 1.3814, corresponding to the 50.0% and 61.8% Fibonacci levels. On the upside, recovery would require overcoming resistance at the 23.6% retracement near 1.4082 and the 200-period SMA at 1.4130, which currently caps broader upside potential [1].
The weekly performance table shows that the Canadian Dollar was the strongest against the US Dollar, with USD declining by 1.00% against CAD. This reflects the broader bearish structure for USD/CAD, as the pair remains below key resistance levels and technical momentum indicators reinforce the prevailing downside bias [1].
CONCLUSION
USD/CAD is holding above the 1.4000 mark despite recent bearish momentum, with technical indicators suggesting further downside risk if selling persists. The Canadian Dollar has outperformed the US Dollar this week, and market participants are advised to watch for a decisive move below 1.4000 for deeper losses. Resistance levels at 1.4082 and 1.4130 remain key hurdles for any potential recovery.