There doesn't look to be much in the way of stopping USD/CAD from breaking higher from current levels
From a technical perspective, with price clearing resistance 1.3445 and 1.3470, it's pretty much plain sailing for a further upside break towards 1.3540-50 at the very least before a potential test of the end December/early January highs around 1.3660-70.
Accompanying the dollar strength yesterday is the weakening of the loonie after the Bank of Canada removed its explicit hiking bias in the final paragraph of its forward guidance. The greenback is also holding more solid in trading today but this feels like an inevitable push higher for USD/CAD regardless as the loonie side of the equation continues to take a hit over the past few weeks.
The only bright spot aiding the Canadian dollar is oil but given that the central bank isn't really putting too much emphasis on that, the tailwind provided isn't as robust bulls would hope for it to be.
This very much seems like a case of things are going to get worse for the loonie first before they get any better in the near future. That being said, in the bigger picture, the upside momentum in USD/CAD is still supported from the rising trendline from February last year. That remains a key support level for buyers to lean on, so watch out for that in the coming weeks/months if price does retrace towards that level.
