Sticky US inflation is shifting the rate backdrop
USD/CAD may be poised to move higher in the coming weeks as the policy outlook between the US and Canada drifts further apart. The latest US inflation data appears firm enough to make it difficult for the Fed to cut rates in 2026, and it may even have been strong enough to reopen the conversation around whether further tightening risks can be ruled out completely. That matters for FX because a more restrictive Fed path tends to support the US dollar, especially against currencies that are more sensitive to growth and commodity swings.
USD/CAD is testing a breakout zone around 1.37
That macro shift has left USD/CAD very close to breaking above an important resistance area around 1.37. The pair is currently testing the 50-day moving average near that level, while the 200-day moving average sits slightly higher around 1.3810. If buyers can push through both levels, the move would strengthen the case that the recent consolidation phase is giving way to a broader upside break rather than another failed rally.
Source: TradingView, 13 May 2026
A move towards 1.39 would fit the improving momentum picture
Momentum indicators are also starting to support the bullish case. After falling into oversold territory in late January, the RSI has been trending higher and has now formed a higher low, which suggests that underlying momentum in USD/CAD is improving. If the pair breaks above both moving averages, the next area to watch is the longer-term resistance zone around 1.39, which lines up with the broader downtrend that has been in place since late 2025.
