Bears Eye 1.4 on USD/CAD as Downside Momentum Holds

The USD/CAD pair is hovering near its lowest level since June 17 as bears eye 1.4000, despite some positive traction for the US Dollar in early European session on Friday.

The USD regains some ground due to inflation risks stemming from volatile energy prices and the Fed rate hike bets in play. Meanwhile, retreating crude oil prices are undermining the commodity-linked Loonie, supporting spot prices above 1.4000.

From a technical perspective, this week's breakdown below the 200-period Simple Moving Average (SMA) on the 4-hour chart has triggered bearish traders. The Moving Average Convergence Divergence (MACD) is below zero, and the Relative Strength Index (RSI) hovers near 37.

While downside momentum remains dominant, it's prudent to wait for follow-through selling and acceptance below 1.4000 before positioning for deeper losses. The USD/CAD pair might then weaken to the 38.2% Fibo retracement around 1.3979 or further to 1.3897 and 1.3814.