USD/CAD Price Forecast: Bears Target 1.3850 Support After Being Blocked at 1.3900

USD/CAD has retreated again after being blocked in the 1.3900 region, now trading near 1.38745, extending its broader bearish bias. The pair had earlier hovered around 1.3900 awaiting clarity on US-Canada trade tensions. With both sides reaching an agreement to suspend the 50% tariff on Canadian exports, the Canadian dollar gained support, pushing the US dollar back below 1.3880.

**Tariff Easing and Oil Prices Jointly Pressure the US Dollar**

Signs of easing in US-Canada trade tensions emerged as both sides reached an agreement to suspend the 50% tariff on Canadian exports, directly weakening the safe-haven demand for the US dollar. Meanwhile, higher oil prices further supported the commodity-linked Canadian dollar. With these two factors combined, USD/CAD has continued to decline after being blocked in the 1.3900 region, with bears regaining the upper hand.

**Technical Focus on Validity of 1.3850 Support**

From a technical structure perspective, after USD/CAD broke below 1.3880, bears are now targeting the 1.3850 support area. If this level gives way, the pair could extend losses toward the monthly low near 1.3820-1.3815, or even test the 1.3800 psychological level. Market reports indicate that the mid-1.3900 area was previously viewed as a bull-bear dividing line, and the pair's return below that level suggests short-term bearish momentum has strengthened.

**Next Focus on Implementation of Trade Agreement**

Although the tariff suspension agreement provides short-term support for the Canadian dollar, the market remains cautious about the implementation details of the agreement and progress in subsequent negotiations. If trade tensions flare up again, USD/CAD could retest the 1.3900 region; conversely, if the agreement progresses smoothly and oil prices remain strong, the probability of a break below 1.3850 will increase. Traders need to closely monitor further statements from both the US and Canadian sides, as well as oil price movements, for further guidance on the exchange rate.