USD/CAD Price Forecast: Bulls have the upper hand while above mid-1.3900s pivotal support

USD/CAD oscillates in a narrow band and is influenced by a combination of diverging forces.

Reduced bets for a jumbo BoC rate cut and an uptick in Crude Oil prices underpin the Loonie.

The USD holds steady near the YTD peak and offers support amid a bullish technical setup.

The USD/CAD pair edges higher during the Asian session on Friday, albeit it lacks follow-through buying and remains below the 1.4000 psychological mark amid mixed cues. 

Hotter Canadian CPI print on Tuesday forced investors to scale back their bets for a big rate cut by the Bank of Canada (BoC) in December. Apart from this, this week's goodish recovery in Crude Oil prices, from over a two-month low touched on Monday, underpins the commodity-linked Loonie and acts as a headwind for the USD/CAD pair. The downside, however, remains cushioned on the back of a strong bullish sentiment surrounding the US Dollar (USD), which continues to draw support from bets for a less dovish Federal Reserve (Fed).

From a technical perspective, the USD/CAD pair showed some resilience below the 100-period Simple Moving Average (SMA) on the 4-hour chart. The subsequent uptick, along with positive oscillators on the daily chart, suggests that the path of least resistance for spot prices is to the downside. That said, the lack of any meaningful buying interest warrants some caution before confirming that the recent pullback from the 1.4100 mark, or the highest level since May 2020 has run its course and positioning for any further appreciating move.