🇨🇦The Canadian Dollar Attempts to Break a 15-Year Downtrend Amid a Bullish Commodity Cycle

What’s Happening Now – An Attempt to Break the Long-Term Trend

Technically, a structural breakout of the 15-year trend has occurred but the move requires a sustained follow-through.

📌 The Canadian Dollar Has Strengthened. Why?

Commodity Supercycle

The CAD is a classic commodity currency as Canada is a major exporter of crude oil and raw materials. Currently, the oil has settled 1% higher as the market prices in the US-Iran escalating tensions The current bullish momentum in commodities is supporting the loonie.

Domestic Economic Strength

Recent Canadian labor market data showed signs of resilience with stable job growth and controlled unemployment. This reduces expectations of aggressive rate cuts from the Bank of Canada. Meanwhile, the regulator put its benchmark on hold last month. If the BoC maintains a relatively firm policy stance, CAD gains support.

The US Dollar Positioning

Meanwhile, the unexpected strength in yesterday’s NFP report (with the 130k new jobs added vs 66k forecasted and the unemployment rate’s decline by 0.1%) temporarily pushed the CAD lower against the greenback.

👉Now, let’s have a look at 🇺🇸🇨🇦USDCAD. The pair is trading near key technical levels, as the CAD gains momentum — recently pushing 🇺🇸🇨🇦USDCAD toward the 1.35700 area, marking a short-term high for the Canadian dollar.

Current Technical Levels in 🇺🇸🇨🇦USDCAD

🔹 Key Support Levels:

1.35000 – Major psychological and technical level1.34200 – Next downside zone if bearish momentum continuesA clean break below 1.3500 would increase downside pressure.

🔹 Resistance Levels:

1.36300 – Near-term resistance zone1.38000 – Strong structural resistanceA move back above 1.36300 would signal potential short-term reversal or correction.

📝  Forecast Scenarios

✅ Bullish CAD Scenario (Bearish 🇺🇸🇨🇦USDCAD)

If:

Oil remains strongThe Bank of Canada holds a firm stanceThe US dollar softensThen 🇺🇸🇨🇦USDCAD could break below 1.3500 and move toward 1.34200 and potentially lower in the medium term. And a sustained move below major support would increase the probability of a broader structural shift.

⚠️ Correction Scenario (🇺🇸🇨🇦USDCAD Bounce)

If:

US yields riseRisk sentiment deterioratesThe Fed maintains a hawkish tone🇺🇸🇨🇦USDCAD could rebound toward 1.36300–1.38000. This would delay the broader CAD breakout narrative.

📆 Short-Term Outlook (3–6 Months)

The broader direction will depend on:

Fed vs. Bank of Canada policy divergenceOil price dynamicsGlobal risk appetiteIf the commodity cycle continues, CAD could gradually strengthen further. However, volatility and corrective rebounds remain likely within the pair. 

Trade USDCAD with Headway