USD/CAD Price Forecasts: US Dollar tests resistance at 1.4045 area

• The Dollar pares losses against the CAD but remains capped below 1.4045.
• A somewhat sourer market sentiment is providing some support to the safe-haven USD.
• Technically, the USD/CAD shows a potential bullish H&S pattern.

 The US Dollar ticked higher against the Loonie, as market sentiment soured in the early European session on Friday. The pair tested the resistance area around 1.4045, without success so far, although the Greenback remains steady above the 1.4000 level, after having bounced from 1.3985 lows on Thursday.

The safe-haven US Dollar nudged higher as market sentiment faltered at the European session opening, with the region's main stock indexes opening in the red. Bulls, however, are lacking acceptance above 1.4045 as investors remain cautious, awaiting a backlog of US data for a better assessment of the US economic outlook and the Fed's interest rate path

Technical analysis: Potential bullish "H&S" above 1.4045

Recent price action suggests that the USD/CAD's correction from early November highs, at 1.4140, might have been completed, and that the pair is ready to resume the broader bullish trend. A potential bullish "Head & Shoulders' pattern, a common figure to anticipate trend shifts, endorses that view.

The neckline of the pattern lies at 1.4045, where the intra-day highs meet the 38.6% Fibonacci retracement of the sell-off from the November 6 highs. Further up, the next target lies in the area between the 61.8% retracement of the same bearish cycle, at 1.4080, and the November 6 lows, at 1.4090.

To the downside, the 1.4015-1.4020 area (intraday low, November 12 highs) is holding bears for now and closing the path towards Thursday's low, at 1.3985. A confirmation below here would increase pressure towards the October 30 low, at 1.3925.