USD/CAD Price Forecast; Dollar picks up above 1.4000 as Oil prices hit the CAD

The US Dollar (USD) is gaining ground against the Canadian Dollar (CAD) on Monday, as investors anticipate the Federal Reserve's (Fed) monetary policy decision on Wednesday. The USD/CAD pair is currently trading at 1.4023, up from Friday's low of 1.3968, although the overall trend remains bearish after a 2% decline over the past two weeks.

The Greenback has shown strength compared to its main peers in a relatively calm trading session, with traders shifting focus back to the Fed's decision. The Fed is expected to keep rates on hold following a September hike, but concerns over high inflation have fueled expectations of a second quarter-point increase in December. Meanwhile, oil prices have fallen about 2% from Friday's highs, adding pressure to the CAD.

Brent Oil is currently trading around $110.30, down from its recent $113.00 peak. The de-escalation of tensions between Qatar and Iran has been received positively by the market, and President Trump has ruled out any further attacks on Iran before the mid-term elections, helping to ease price pressure. Although the pair shows a capped tone, recent price action suggests a potential bullish reversal, as indicated by a hammer candlestick pattern on Friday.

Momentum indicators remain negative on the daily chart, however. Technical analysis indicates that bulls are currently capped below the 1.4040 level, which could mark a pivot point towards the October 19 low and October 21 high, around 1.4080. Support is expected around the September 17-18 lows in the 1.3975 area and the 61.8% Fibonacci retracement of the September-October rally at 1.3965, with further downside targets at the September 2 high of 1.3940 and the 78.2% Fibonacci retracement at 1.3874.