USD/CAD Breaks 1.3800 on Oil Weakness and BoC Rate Cut Expectations

USD/CAD has surged above the 1.3800 psychological level, gaining 0.4% (55 pips) as the Canadian dollar weakens on multiple fronts. Oil prices declined 1.2% to $78.50 per barrel despite OPEC+ production decisions, weighing on the commodity-linked CAD. Markets are increasingly pricing in a potential Bank of Canada rate cut in coming months, with overnight index swaps showing a 65% probability of easing by September. Canadian economic data has disappointed recently, with retail sales contracting 0.3% month-over-month. Technical indicators suggest further upside potential, with the next resistance at 1.3850 (April highs). Support has formed at 1.3750, coinciding with the 50-day moving average. Traders should monitor oil price movements and upcoming Canadian GDP data for directional cues. A sustained break above 1.3850 could accelerate gains toward the 1.3900 region.