USDCAD Analysis – Breaking the Chains, Eyeing 1.38+

USDCAD Price broke out from a long descending channel, followed by two bullish continuation flags – classic breakout-retest pattern.

Price is now pushing above 1.3720, aligning with the 38.2% Fib level of the prior drop.

Next upside targets:
🔹 1.3833 (Fib 61.8%)
🔹 1.3913 (Fib 78.6%)

Clear stop level: below 1.3625 (channel breakout support)

Structure Bias: Bullish continuation. Clean breakout + consolidation = probable impulse toward 1.3830/1.39.

📊 Current Bias: Bullish
🔍 Key Fundamentals Driving USDCAD
USD Drivers (Neutral to Bullish):

Fed held rates, dot plot shows only 1 cut in 2025, but Powell's tone leaned dovish.

US Retail Sales + PPI were weak, but safe-haven USD demand persists due to geopolitical risks and equity volatility.

Market reassessing Trump election risk, Fed independence, and inflation stickiness.

CAD Drivers (Bearish):

Oil prices are volatile due to Middle East tensions, but weak demand caps upside.

Canada’s CPI softened, BoC already delivered a dovish cut earlier this month.

CAD under pressure due to dovish BoC outlook and fiscal concerns (gov't budget deficits expanding).

CAD is also suffering from reduced foreign investment flows.

⚠️ Risks to Watch
Oil price spikes (especially if Strait of Hormuz risk escalates) may boost CAD short-term.

A sharp reversal in DXY or Fed commentary shift toward aggressive easing.

Weak US data next week (Core PCE especially) could unwind USD momentum.

🗓️ Upcoming Events to Watch
US Core PCE (June 28) – critical inflation gauge for the Fed

BoC Business Outlook Survey

Oil Inventories + Global energy sentiment

Geopolitical: Israel–Iran updates and Canada’s fiscal signals

🏁 Which Pair Leads the Move?
USDCAD is leading commodity crosses as CAD weakness broadens. Watch USDCAD and GBPCAD for signs of CAD softness before others like AUDCAD/NZDCAD follow.