USD/CAD trades with mild losses around the 1.3700 level during European trading hours on Friday, extending its recent consolidation after failing to attract sustained buying interest. Price action remains subdued, with the pair unable to distance itself from recent lows despite a tentative technical rebound earlier in the week.
From a technical perspective, the daily chart shows that USD/CAD previously broke to the upside from a descending wedge formation, a pattern that typically carries bullish implications. However, momentum indicators suggest that the recovery remains fragile. The 14-day Relative Strength Index (RSI) stands near 35.1, well below the neutral 50 level, signaling weak underlying momentum even after rebounding from oversold territory below 30.
Technical analysis: bears retain control below short-term resistance
The pair continues to trade below both the nine-day and the 50-day Exponential Moving Averages (EMA), reinforcing the bearish bias. While the nine-day EMA is flattening near current price levels, the broader downward slope of both averages suggests that sellers remain in control unless a clear upside break materializes.
USD/CAD recently touched a fresh five-month low at 1.3642 on December 26. A renewed move lower would likely drag the pair back inside the descending wedge, increasing downside pressure toward the lower boundary of the pattern near 1.3550. Below this level, the October 2024 low at 1.3539 would come into focus as the next key support.
Resistance levels limit recovery attempts
On the upside, the immediate resistance is located at the nine-day EMA around 1.3715. A sustained break above this short-term average would be the first signal of improving momentum and could open the door for a move toward the 50-day EMA near 1.3848.
Should the pair manage to reclaim the medium-term moving average, bullish momentum would likely strengthen, allowing USD/CAD to target the four-week high at 1.4014, last seen on December 2. Until then, price action remains vulnerable to further downside pressure amid a dominant bearish technical structure.
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