USD/CAD Plunges on Dollar Weakness and Rising Oil, FOMC Meeting in Focus

USD/CAD has declined sharply this week, falling 1.2% (160 pips) to test 1.4020 support levels, as broad-based dollar weakness combines with Canadian dollar strength. The selloff accelerated after Canada's unemployment rate unexpectedly held steady at 6.8% while adding 50,500 jobs in November, beating forecasts of 25,000. Simultaneously, WTI crude oil prices surged 3.5% to $71.20 per barrel, providing additional tailwind for the commodity-linked CAD. The diverging economic trajectories between the US and Canada have widened, with Canadian GDP growth surprising to the upside at 2.1% annualized. Technical indicators show USD/CAD breaking below its 50-day moving average at 1.4085, with next major support at 1.3980. Traders are positioning defensively ahead of next week's FOMC meeting, where any dovish signals could extend the pair's downtrend toward the 1.3950 psychological level.