USD/CAD Corrects Toward Key Support as Weekly Uptrend Stalls

USD/CAD has been trending higher throughout the week but is now pulling back toward a key support target as bullish momentum fades. The pair's rally was driven by a combination of escalating geopolitical tensions in the Middle East, widening U.S.-Canada interest-rate differentials, and deteriorating Canadian economic fundamentals. Risk aversion surged after reports that both Iran and the U.S. violated a ceasefire agreement, exchanging missile and drone strikes, which boosted safe-haven demand for the U.S. dollar. The Canadian dollar faced additional headwinds from a weakening domestic economic backdrop, further supporting the pair's upside bias. However, the rally has now stalled, with the pair correcting toward a technical support zone. Traders should watch for whether this support level holds, as a bounce could signal a continuation of the uptrend, while a break below may open the door to deeper retracement. Near-term price action will likely depend on further geopolitical developments and incoming Canadian economic data releases.