USD/CAD Price Forecast: Moves away from multi-year peak, slips below 1.4400 mark

• USD/CAD retreats after touching a fresh multi-year peak earlier this Thursday.
• The overbought RSI prompts some profit-taking amid subdued USD price action.
• The recent breakout through an ascending trend channel favors bullish traders.

The USD/CAD pair extends its steady intraday retracement slide from the highest level since March 2020 and drops back closer to the 1.4400 mark during the first half of the European session on Thursday. The uptick could be attributed to some profit-taking amid the overbought conditions on the daily chart, though the fundamental backdrop seems tilted firmly in favor of bulls. 

The Federal Reserve (Fed) offered a more hawkish view and signaled a cautious path of policy easing next year, which remains supportive of a further rise in the US Treasury bond yields to a multi-month peak. Apart from this, geopolitical risks and trade war fears should continue to act as a tailwind for the US Dollar (USD). Apart from this, the political crisis in Canada, the Bank of Canada's (BoC) dovish stance and a downtick in Crude Oil prices could undermine the commodity-linked Loonie. This might contribute to limiting the downside for the USD/CAD pair. 

From a technical perspective, the Relative Strength Index (RSI) remains above the 70 mark and prompts some long unwinding around the USD/CAD pair. That said, this week's breakout through a multi-week-old ascending channel was seen as a key trigger for bullish traders and supports prospects for the emergence of dip-buying at lower levels. Hence, any further corrective slide below the 1.4400 round figure is likely to find decent support and remain limited near the aforementioned ascending trend-channel breakout point, around the 1.4335-1.4330 region. 

This is closely followed by the 1.4300 mark, which if broken decisively might prompt some technical selling and drag the USD/CAD pair to the next relevant support near the 1.4250 horizontal zone. The downward trajectory could extend further towards the 1.4220-1.4215 region en route to the 1.4200 round figure. 

On the flip side, the 1.4450 zone now seems to act as an immediate hurdle. Some follow-through buying beyond the 1.4465 area, or the multi-year top, should allow the USD/CAD pair to reclaim the 1.4500 psychological mark. The subsequent move-up has the potential to lift spot prices to the 1.4560 intermediate hurdle en route to the 1.4600 round figure and March 2020 swing high, around the 1.4665-1.4670 region.

USD/CAD daily chart