USDCAD gets support from resilient American economy

Since May 22, 2026, USDCAD has been grinding higher, trading near 1.3790—its strongest level in more than a month. But what's the engine behind the rally? A one-two punch from the Federal Reserve (Fed): hawkish rhetoric and rising Treasury yields, both giving the American dollar a serious edge.

The economic backdrop in the United States remains rock solid. Initial jobless claims are low, manufacturing activity hit a nearly four-year high in May, and the labor market refuses to crack. These numbers are pushing expectations of monetary easing further down the road, keeping the door shut on interest rate cuts for now. 

Across the border, however, the story is less cheerful. Canada's latest inflation report came in softer than anticipated. Yes, Headline Consumer Price Index (CPI) accelerated to 2.8% year-over-year, but core measures continue to slow. This situation has poured cold water on hopes for another Bank of Canada (BoC) rate hike, widening the policy gap between the two neighbors and giving USDCAD an extra tailwind.

Add geopolitical uncertainty to the mix. Stalled Middle East talks are keeping investors on edge, fueling demand for safe havens like the US dollar. The loonie, meanwhile, can't seem to catch a break—even surging oil prices are not enough to lift it. 

Technically, the trend is still pointing north. The Chaikin Oscillator is holding above zero, a sign that volume is confirming the move. As long as the price stays above the 1.3730–1.3740 support, the bullish path remains intact, with eyes on 1.3810–1.3850. A break below this zone would be the first real warning. For now, the immediate test sits at 1.3800—a level that sent the pair retreating on Thursday.

For those looking to get in, here is a trading plan: 

Buy USDCAD on a pullback near 1.37765. Lock in profits at 1.38350. Place Stop loss at 1.37285.

This forecast holds true from May 22 till May 29, 2026.