USD/CAD consolidates below 1.3730 resistance as markets await US PPI and Canadian GDP

USD/CAD remains supported as safe-haven flows underpin the US Dollar, despite relatively stable Canadian fundamentals. The Canadian Dollar weakened even after data showed a narrowed current account deficit, as broader market risk aversion shifted capital toward the greenback.

The pair continues to trade near the 1.3730 resistance area, with price action suggesting underlying bullish momentum. Sustained USD strength, particularly if supported by firm US macroeconomic releases, could reinforce upside pressure in the near term.

Market sentiment has recently favored the US Dollar amid cautious risk appetite. If this dynamic persists into March, the Canadian Dollar may face additional headwinds from trade negotiation uncertainty, soft domestic growth signals, and external demand concerns.

Technical analysis: Triple top formation at key resistance

From a technical perspective, USD/CAD is consolidating beneath a significant resistance zone after forming three visible tops, indicating strong supply pressure around the 1.3730 area.

A decisive break and daily close above this level would confirm bullish continuation and potentially expose the 1.3800 psychological handle.

On the downside, immediate support is seen at:

• 1.3630
• 1.3550

A sustained move below this support band could shift short-term momentum in favor of sellers and open the door toward the 1.3420 region.

Fundamental drivers to watch

Upcoming US data will likely determine the next directional move. Key releases include:

• Core PPI m/m
• PPI m/m

Stronger-than-expected producer inflation could reinforce expectations that the Federal Reserve will maintain a firm policy stance, supporting the US Dollar and lifting USD/CAD.

Conversely, softer PPI readings — particularly below the 0.3% expectation threshold — could weigh on the USD and trigger corrective downside pressure.

On the Canadian side, GDP is forecast to expand by 0.1%. An upside surprise could lend near-term support to the Canadian Dollar.

Additionally, oil price dynamics remain crucial. As a major crude exporter, Canada benefits from higher oil prices. If crude continues rising due to OPEC+ supply adjustments, geopolitical tensions, or inventory declines, CAD strength may intensify, potentially driving USD/CAD lower.

While Canada’s CPI recently eased slightly below expectations — reducing pressure on the Bank of Canada to tighten aggressively — stable policy expectations combined with firm oil prices may still provide underlying support for the Canadian Dollar.

Outlook

USD/CAD remains at a technical inflection point. A confirmed break above 1.3730 would likely extend gains toward 1.3800, particularly if US inflation data beats expectations. However, weaker US data combined with stronger Canadian GDP and rising oil prices could shift the bias lower toward key support levels.

Traders now await upcoming inflation and growth data for directional confirmation.