USD/CAD consolidates near 1.3900 as bulls pause rally

USD/CAD is consolidating around 1.3890 after encountering resistance just below the psychologically important 1.3900 level, with bulls taking a breather following recent gains. The pair's upward momentum has stalled as oil prices stabilize near $75/barrel, providing modest support for the commodity-linked Canadian dollar. Technical indicators suggest the rally may be overextended, with RSI readings approaching overbought territory above 65. Bank of Canada's dovish stance continues to cap CAD strength, but immediate USD buying has moderated ahead of key US inflation data. Support has formed at 1.3850, coinciding with the 20-day moving average, while resistance at 1.3900-1.3920 zone proves difficult to breach. Traders await fresh catalysts, with Canadian employment data and US CPI figures likely to determine the next directional move. A decisive break above 1.3900 could target 1.3950, while failure might see a pullback toward 1.3820.