USD/CAD Price Forecast: Could surpass 1.3900 as break above 38.2% Fibo. comes into play

USD/CAD attracts some follow-through buying amid a combination of supporting factors.
Geopolitical risks and inflation-driven Fed rate hike bets benefit the safe-haven Grenback.
Softer oil prices and the US-Canada trade war undermine the Loonie, supporting the pair.

Haresh Menghani FXStreet

The USD/CAD pair is seen building on its recovery move from the 1.3730 region, or a three-month low touched last week, and gaining positive traction for the second straight day on Tuesday. Spot prices stick to modest intraday gains through the first half of the European session and currently trade around the 1.3865 area, up 0.15% for the day.

The US Dollar (USD) attracts some follow-through buying as inflation risks stemming from volatile energy prices keep bets for at least one interest rate hike by the US Federal Reserve (Fed) on the table. Apart from this, geopolitical uncertainties stemming from the US-Iran standoff act as a tailwind for the safe-haven Greenback. Furthermore, a modest downtick in crude oil prices and the deepening US-Canada trade war undermine the commodity-linked Loonie, lending additional support to the USD/CAD pair.

From a technical perspective, an intraday move above the 23.6% Fibonacci retracement level of the June-August decline could be seen as a key trigger for bullish traders. Moreover, momentum indicators are leaning constructive, with the Relative Strength Index (14) hovering near 62 and Moving Average Convergence Divergence (MACD) readings staying in positive territory. This hints that buyers are attempting to stabilize the USD/CAD pair after its recent pullback and build on the recovery from a multi-month low.

Any subsequent move up, however, might confront an immediate resistance near the 1.3900 mark ahead of the 1.3925-1.3930 confluence – comprising the 100-period Simple Moving Average (SMA) on the 4-hour chart and the 38.2% Fibo. level. A further recovery attempt would face additional supply around the 50.0% level at 1.3988 and the 61.8% retracement at 1.4049. On the downside, initial support is seen at the 23.6% Fibo. retracement at 1.3852, with a deeper floor emerging at the Fibo. anchor near 1.3731 if selling resumes.

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

USD/CAD 4-hour chart

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Canadian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.17%	-0.04%	0.37%	0.39%	0.26%	0.35%	0.29%
EUR	-0.17%		-0.21%	0.11%	0.22%	0.09%	0.19%	0.12%
GBP	0.04%	0.21%		0.24%	0.45%	0.32%	0.39%	0.35%
JPY	-0.37%	-0.11%	-0.24%		0.08%	-0.03%	0.06%	-0.00%
CAD	-0.39%	-0.22%	-0.45%	-0.08%		-0.08%	-0.01%	-0.10%
AUD	-0.26%	-0.09%	-0.32%	0.03%	0.08%		0.08%	0.03%
NZD	-0.35%	-0.19%	-0.39%	-0.06%	0.01%	-0.08%		-0.05%
CHF	-0.29%	-0.12%	-0.35%	0.00%	0.10%	-0.03%	0.05%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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