USDCAD breaks key confluence, FOMC in focus

The USDCAD pair has extended its upward move, pushing above a significant confluence zone that could be decisive in determining whether buyers strengthen their grip or sellers engineer a reversal.

This zone is formed by the 38.2% retracement of the 2026 trading range, sitting at 1.39308, and the 100-day moving average at 1.39350. With just a four-pip gap between these two markers, the area carries extra technical weight.

Price peaked at 1.39432, clearing both levels in the process. That hands buyers a near-term win, though the breakout still needs to be sustained. The 1.39308–1.39350 band now serves as the immediate support that defines risk. If the rally stalls and price falls back, it would mark a letdown for the bulls. Remember back on September 2, the pair also climbed above the 100-day moving average but met resistance at an topside trendline, reversing lower. A sustained push above both the 100-day and the 38.2% level would signal a key breakout.

What buyers need to do

For buyers, the priority is holding above the 100-day moving average at 1.39350 and the 38.2% retracement at 1.39308. Defending this cluster would reinforce their control and open the path toward:

• 1.3948 to 1.39663, the next resistance zone based on swing highs and lows from late March 2026

• 1.39901 to 1.40031, which includes the 50% retracement at 1.39915

• 1.40557, close to the 61.8% retracement at 1.40522

Those levels are potential targets, but they also mark areas where sellers might step in, with well-defined risk and limited downside.

What sellers need to do

On the downside, sellers need to drive the price back below the 100-day moving average at 1.39350 and then below the 38.2% retracement at 1.39308. A close below both would signal the breakout has failed, tilting the near-term bias back to neutral after that failure.

A drop back under those levels would turn attention to the 200-bar moving average on the 4-hour chart at 1.38892. That level was breached earlier this week, then tested and held as support before price moved higher. Traders are closely watching this area. Below that, the next downside targets are the 100-bar moving average on the 4-hour chart at 1.38543 and the 200-day moving average at 1.38330.

Trading education: The break is only the first step

In my book Attacking Currency Trends, I emphasize that pushing through a technical level is just the beginning. Price must also stay beyond that level to validate that buyers or sellers remain in charge.

For USDCAD, the climb above both 1.39308 and 1.39350 handed buyers a short-term win. Holding above those levels would reinforce that signal. If price falls back below them, the failed breakout would boost sellers' confidence.

The setup is simple: staying above 1.39350 and 1.39308 keeps buyers in command, with 1.39663 as the next target. Slipping back below both levels would weaken the bullish outlook. The market's next move will offer the clearest clue.