USD/CAD Price Forecast: Bears wait for 50% Fibo. support near 1.4030 to give way

• Firm oil prices continue to support the Loonie, leaving USD/CAD bulls reluctant to enter the market.
• Further declines are contained as geopolitical risks and expectations of a Fed rate rise lend the USD some support.
• A move below the 50% Fibonacci retracement is required to confirm the short-term bearish technical outlook.

Around 1.4050, USD/CAD is trading steadily in Wednesday’s early European session, with a modest rise in the US Dollar (USD) keeping sellers cautious. The pair has struggled to extend the previous day’s limited recovery from the 1.4030 area, a low not seen for nearly a month. Higher oil prices are supporting the commodity-linked Loonie and restricting the pair’s gains.

A roughly 90% probability of another US Federal Reserve (Fed) rate rise in December is priced into markets, reflecting investors’ apparent conviction as volatile crude oil prices fuel inflation concerns. Uncertainty over US-Iran peace talks is also sustaining the geopolitical risk premium. This has helped the safe-haven USD edge up from a three-week low, providing support for USD/CAD. With key central bank events due next week, traders may also be reluctant to take sizeable directional positions. These include the Bank of Canada (BoC) rate decision and, on Wednesday, the outcome of the two-day FOMC meeting.

On the 4-hour chart, the overnight breach of the 200-period Simple Moving Average (SMA) was regarded as a new bearish trigger. With the Relative Strength Index (RSI) close to 31 and Moving Average Convergence Divergence (MACD) marginally below zero, the indicators together point to limited scope for rallies while sellers remain in control. Confirmation of the negative bias nevertheless requires a break beneath 1.4030, the 50% Fibonacci retracement of the September-October advance. Such a move would strengthen the case for further USD/CAD declines.

Below that, the next notable support lies at 1.3968, the 61.8% retracement. Further support comes at 1.3876 and then the 1.3760 area; a breach of the latter would leave the broader corrective floor of the current Fibonacci cycle exposed. Any recovery would initially face resistance between 1.4079 and 1.4096, where the 200-period SMA and 38.2% retracement converge. Beyond this zone are the 23.6% retracement at 1.4175 and the recent swing high near 1.4303.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

USD/CAD holds steady on the 4-hour chart