USD/CAD Price Forecast: Bears look at 1.3850 support after rejection at 1.3900

The US Dollar is displaying a more aggressive bearish trend, with the Canadian Dollar finding support from higher Oil prices and a temporary pause in 50% tariffs on Canadian exports. Following a rejection at the 1.3900 level, the USD/CAD pair is now trading below 1.3880, with bears targeting the 1.3850 support zone. On Wednesday, the US and Canada struck a last-minute deal to postpone the implementation of new tariffs on Canadian goods for three days, as talks advance towards a trade agreement.

Meanwhile, Oil prices, being Canada's primary export, continue to climb as the US-Iran peace process remains unresolved and markets anticipate a prolonged closure of the Strait of Hormuz. Brent Oil surged by over 6% over the past three days, reaching the $90.00 level, indicating potential for increased trade revenues for Canada.

At the moment, USD/CAD is at 1.3876, maintaining a slight bearish outlook in the short term, with momentum indicators in the daily chart firmly in the bearish camp. The daily Relative Strength Index (RSI) is near 32, just above oversold levels, while the Moving Average Convergence Divergence (MACD) is well below zero, signaling strong downward pressure.

Support has been found at the intersection of the 200-day Simple Moving Average (SMA) and the bottom of the descending channel, at the 1.3850 level, but the rejection at 1.3900 confirms that the bears are currently in control. The next significant target for the pair would be the late May lows at 1.3770. On the upside, the 1.3900 level must be surpassed to alleviate bearish pressure and pave the way toward the previous support area and the channel top, near the 1.4000 level.