USD/CAD Price Forecast: Tests initial support at 1.3800 near six-month lows

• The USD/CAD pair could test the six-month low of 1.3781.
• The 14-day RSI remains above the 30 level, reinforcing the prevailing bearish bias.
• The pair could test the upper boundary of the descending channel near 1.3840.

The USD/CAD pair retraces its losses registered in the previous session, trading around 1.3810 during the European hours on Thursday. However, technical analysis on the daily chart indicates a prevailing bearish trend, with the pair continuing to move lower within a clearly defined descending channel.

Additionally, the 14-day Relative Strength Index (RSI) remains above the 30 level, reinforcing the prevailing bearish bias. A breach below the 30 mark would indicate an oversold situation and a potential for a corrective rebound in the near future. Additionally, the USD/CAD pair remains below the nine-day Exponential Moving Average (EMA), indicating a weaker short-term price momentum.

On the downside, the USD/CAD pair is testing the six-month low of 1.3781, last touched on April 21. A clear break below this level would reinforce the bearish bias, potentially driving the pair toward the 1.3419 -- its lowest point since February 2024, with additional support seen around the descending channel's lower boundary near the 1.3400 area

The USD/CAD pair could test the upper boundary of the descending channel near 1.3840, aligned with the nine-day EMA of 1.3844. A break above this crucial resistance zone would improve the short-term price momentum and would signal a potential shift toward a bullish bias, paving the way for a move toward the 50-day EMA at 1.4086. Further gains could target the next major resistance at 1.4793 -- the lowest level observed since April 2003.

USD/CAD: Daily Chart