USD/CAD drops to 1.3580 as BoC pause expectations boost Canadian dollar

USD/CAD declined 0.6% to 1.3580 Monday, driven by Canadian dollar strength following upbeat GDP data and expectations the Bank of Canada will pause rate cuts. Canada's Q1 GDP grew 2.9% annualized, beating the 2.2% forecast, while monthly GDP for March rose 0.3%. The strong economic performance reduced market expectations for a BoC rate cut at the June meeting, with odds dropping to 25% from 60% previously. Oil prices jumping 2.1% to $78.40 provided additional CAD support. Technical analysis shows USD/CAD breaking below the 1.3600 support level, targeting 1.3550 next. The 200-day moving average at 1.3520 represents key support. Dollar weakness from US-China tensions compounded the pair's decline. Traders should monitor Tuesday's Canadian manufacturing PMI and Wednesday's BoC Business Outlook Survey for further CAD direction. The bearish momentum could extend toward 1.3500 if oil prices remain elevated.