USDCAD: CPI-Fueled Breakout Supported by Bond Yields

USDCAD broke out on Wednesday while the US Dollar Index (DXY) cleared a key level for the first time since November.

But the bigger story for the US dollar is what’s happened with bond yields, and most traders don’t even know it’s happening.

Get all the details in today’s video, including USDCAD key levels and targets, the latest on the DXY, and why this dollar rally is built differently!

USDCAD broke out on Wednesday on a US CPI-fueled surge that took the pair above 1.3656.

This has been something we’ve discussed in the VIP trading group for months.

In fact, a bullish breakout from USDCAD has been on our radar since the bullish reclaim I wrote about on January 3rd.

I’m even still in my long trade from that reclaim, which is now up 350 pips as of today’s rate.

But today, I want to discuss why this week’s US dollar rally is built differently than previous failed rally attempts.

First, we have the DXY above the 105.00 handle on a daily closing basis for the first time since November.

However, the real reason this week’s dollar rally is different is what’s happened with US bond yields, specifically the 10-year yield.

Last week’s reclaim of 4.335% from the US 10-year yield is significant, as it cancels out the breakdown we saw in late November.

It also negates the idea that the September – November move was a failed breakout and suggests a resumption of the uptrend this year.

Why does that matter for the DXY or USDCAD?

Check out today’s video above, but the US 10-year yield and DXY share an extremely positive correlation.

So although we’ve seen a lot of indecision from the US dollar this year, yesterday’s breakout is anchored by bond yields, something we haven’t had in 2024 until now.

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