Title: USD/CAD Breaches Key Resistance as Bullish Momentum Builds (Extended Analysis)
Original Article Source: Economies.com – “The USDCAD Price Is Breaching Key Resistance – Analysis – 07-01-2026”
Original Author: Economies.com Analyst Team
The USD/CAD pair has recently surpassed a key resistance level, signaling a continuation of bullish momentum that has been developing in recent trading weeks. Technical and fundamental factors are aligning to potentially support a stronger U.S. Dollar (USD) against the Canadian Dollar (CAD) in the near term, and traders are closely monitoring market indicators for confirmation.
This article expands on the original analysis by digging deeper into technical indicators, macroeconomic fundamentals, upcoming economic events, and possible trading scenarios. It draws from the original content by Economies.com published on January 7, 2026, with additional context and perspectives from other market sources.
Overview of the USD/CAD Market Context
In the first week of January 2026, USD/CAD showed notable strength. The pair advanced past the crucial resistance level at 1.3250, suggesting that bulls have regained control after several weeks of consolidation. This movement coincides with a stronger U.S. Dollar index (DXY) and pressure mounting on the Canadian Dollar due to weaker oil prices and slowing domestic economic growth.
Key Elements Behind the Breakout:
– Technical breach of the 1.3250 resistance, triggering potential buy interest
– Positive U.S. economic data reinforcing expectations for interest rate hikes
– Weakening oil prices tightening pressure on CAD, as Canada relies on petroleum exports
– Flight to the U.S. Dollar amid global economic uncertainty
Let’s explore each of these drivers in more detail.
Technical Analysis of USD/CAD
The USD/CAD pair’s movement beyond the resistance line at 1.3250 is technically significant. This zone had previously acted as a barrier preventing upward movement, and recent bullish candles closing above this level indicate the possibility of sustained upward momentum.
1. Support and Resistance Levels:
– Immediate resistance is now seen near 1.3320. A break above this level could push the price toward 1.3450.
– Initial support lies at 1.3180 and then at 1.3115. A drop below these areas could negate the current bullish pattern.
2. Trend Patterns:
– The price has been forming higher highs and higher lows since mid-December 2025, which is indicative of a short-term bullish trend.
– The pair has exited a descending wedge pattern, which often signals a reversal to the upside.
3. Moving Averages:
– The 50-day Simple Moving Average (SMA) crossed above the 100-day SMA in early January, a bullish crossover that typically supports continued upward momentum.
– The current price is above the 200-day SMA, a long-term bullish sign.
4. RSI (Relative Strength Index):
– The RSI is currently near 64 on the daily chart. Although not yet overbought (over 70), it suggests growing positive momentum without signaling a reversal risk yet.
5. MACD (Moving Average Convergence Divergence):
– The MACD line is above the signal line, and histogram bars are positive, showing increasing momentum in favor of buyers.
From a technical perspective, the rebound in USD/CAD is more than a short-lived correction. It shows signs of being a sustainable trend continuation, especially if it passes the next resistance at 1.3320.
Fundamental Drivers of USD/CAD
In addition to supportive technical indicators, several fundamental factors are contributing to the upward drive in the USD/CAD currency pair.
U.S. Dollar Strength:
– The U.S. Federal Reserve continues its hawkish stance in maintaining elevated interest rates to manage inflation. Recent remarks from the Fed Chair reaffirmed the central bank’s position to keep policy restrictive until price stability is achieved.
– U.S.
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