USDCAD is consolidating inside a descending flag structure following a strong impulsive rally earlier in May. The current pullback is orderly and corrective, indicating potential for continuation higher. If price breaks above 1.3960, this flag breakout could extend toward 1.4130 and possibly 1.4225. With CAD weakening on soft oil prices and USD regaining strength from yield-driven flows, the bias remains bullish while price stays above 1.3870.
🔍 Technical Analysis
Pattern: Bullish flag forming after a strong rally
Support Zone: 1.3870–1.3900 → base of flag
Resistance/Breakout Zone: 1.3960–1.3980 → upper flag line
Structure:
Higher lows holding firm
Fib confluence near 1.3933 (23.6% retracement)
Target Levels:
1.4130 – 50% fib level + previous structure resistance
1.4225 – 61.8% fib zone from March–April high
📈 Bias: Bullish continuation on breakout
🌍 Fundamental Context
🇺🇸 U.S. Dollar (USD)
Supported by:
Higher bond yields
Fed expected to hold rates higher for longer
Safe-haven inflows post-Moody’s downgrade fading
USD Index recovering broadly across majors
🇨🇦 Canadian Dollar (CAD)
Oil prices softening due to global demand concerns (China slowdown, US inventories)
BoC likely done hiking — no fresh bullish catalysts
CAD correlation with crude oil adds downside risk if energy markets weaken further
🎯 Trade Plan
Entry: Break and close above 1.3960
Stop Loss: Below 1.3870 (flag support zone)
Targets:
TP1: 1.4130 (structure resistance + fib level)
TP2: 1.4225 (swing high + golden ratio)
⚠️ Risk Factors to Watch
If USD sentiment shifts (e.g., dovish Fed speaker) → breakout may fail
Crude oil rebound would support CAD and cap USD/CAD upside
False breakouts common near 1.3960 — wait for confirmation (strong candle close)
🧭 Conclusion
USD/CAD remains in a bullish consolidation phase with a clear continuation setup. A break above 1.3960 would confirm a flag breakout targeting 1.4130 and 1.4225. With the macro backdrop favoring the USD and energy-linked CAD weakening, this setup offers clean structure and potential for follow-through.
🔍 Technical Analysis
Pattern: Bullish flag forming after a strong rally
Support Zone: 1.3870–1.3900 → base of flag
Resistance/Breakout Zone: 1.3960–1.3980 → upper flag line
Structure:
Higher lows holding firm
Fib confluence near 1.3933 (23.6% retracement)
Target Levels:
1.4130 – 50% fib level + previous structure resistance
1.4225 – 61.8% fib zone from March–April high
📈 Bias: Bullish continuation on breakout
🌍 Fundamental Context
🇺🇸 U.S. Dollar (USD)
Supported by:
Higher bond yields
Fed expected to hold rates higher for longer
Safe-haven inflows post-Moody’s downgrade fading
USD Index recovering broadly across majors
🇨🇦 Canadian Dollar (CAD)
Oil prices softening due to global demand concerns (China slowdown, US inventories)
BoC likely done hiking — no fresh bullish catalysts
CAD correlation with crude oil adds downside risk if energy markets weaken further
🎯 Trade Plan
Entry: Break and close above 1.3960
Stop Loss: Below 1.3870 (flag support zone)
Targets:
TP1: 1.4130 (structure resistance + fib level)
TP2: 1.4225 (swing high + golden ratio)
⚠️ Risk Factors to Watch
If USD sentiment shifts (e.g., dovish Fed speaker) → breakout may fail
Crude oil rebound would support CAD and cap USD/CAD upside
False breakouts common near 1.3960 — wait for confirmation (strong candle close)
🧭 Conclusion
USD/CAD remains in a bullish consolidation phase with a clear continuation setup. A break above 1.3960 would confirm a flag breakout targeting 1.4130 and 1.4225. With the macro backdrop favoring the USD and energy-linked CAD weakening, this setup offers clean structure and potential for follow-through.
Note
USD is broadly firming again as markets push back on rate cut timing.CAD is under pressure from:
Weak oil prices
Slowing Canadian housing and NHPI data
If oil drops or Fed hawkish tone returns, USD/CAD can still rally from here.
Note
Note
Still valid to buy, especially with oil stalling and weak Canadian IPPI (-0.5%) and RMPI (-2.2%).USD data supports the bounce — watch for reclaim above 1.3900 for continuation to 1.4045+.
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🥇95% Accurate Signals
♻️1-2 Daily Signals
✔️Free Daily Profitable Signals
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.