USDCAD | Break Below the Ascending Channel as Data Shifts

USDCAD extended its decline today after strong Canadian labour data surprised to the upside while the US dollar softened on growing expectations of a dovish Fed shift. The combination has pulled the pair to a two-month low and accelerated a technical break that had been building for weeks.

Technical Lens

Price has broken below the ascending channel that has contained USDCAD since June 2025, a structure that repeatedly acted as dynamic support for trend participants.
This breakdown follows the completion of a head-and-shoulders pattern near the upper channel boundary, with price now driving decisively toward the mid-range support.

The next meaningful zone sits near 1.3750, which aligns with:

• Prior demand from September
  
• A retest of the broader structural shelf
  
• The projected move from the neckline break
  

This level stands out as the next inflection point to watch.
Scenarios

• If momentum continues toward 1.3750

Price could be heading into a key decision area where CAD strength may stabilise, especially if macro conditions continue favouring it.

• If price reclaims the broken channel

Recovering back above the former lower boundary could signal a false break, reopening the path toward 1.40 and the mid-channel zone.
Catalysts

• Canadian jobs beat boosted CAD: +53.6k jobs, unemployment dipping — strengthening the currency backdrop.
  
• Fed expectations leaning dovish, weighing on USD as traders price in potential rate cuts.
  
• Oil sensitivity: Any extended strength in crude could add pressure on USDCAD.
  
• Upcoming U.S. PCE inflation remains the next major macro pivot; a hotter print could revive USD buying.
  

Takeaway
USDCAD’s clean break of a six-month rising channel shifts focus to 1.3750 as the next major area of interest — a zone that may decide whether this is a trend reversal or simply a deep correction within the broader structure.