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Bank of Canada Takes a Pause, But Imminent Trade Risks Hint at More Cuts to Come

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  • April 17, 2025
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The Canadian Dollar advanced after the Bank of Canada (BoC) surprised the market by taking a pause from its rate-cutting cycle, keeping interest rates steady for the first time since it began easing last June. Although the move gave the CAD short-term relief, the BoC’s Monetary Policy Report emphasized continued trade tensions and economic uncertainties, hinting that the pause might be temporary. The central bank presented two scenarios: a mild slowdown if tariffs are relaxed, or a deep recession if trade disputes intensify. With rate cuts already partly reflected in markets, analysts expect further easing to come — perhaps as soon as June — once the direction of U.S. trade policy becomes clearer. KEY LOOKOUTS • The Bank of Canada’s hold on rates surprised some market expectations, providing near-term support to the Canadian Dollar, but the pause is widely regarded as temporary. • BoC policy perspective is extremely reactive to changing trade tensions, particularly U.S. tariff actions, which will significantly impact rate direction going forward. • Scenario 1 is premised on a smooth resolution of trade tensions with a transient dip in inflation, whereas Scenario 2 is predicting a deeper worldwide slowdown and Canadian recession should an all-out trade war materialize. •  The OIS market already has 50bps of rate cuts priced in, anticipating a softer economic landing, but a further rise in trade risks may provoke even lower cuts. The Bank of Canada’s pause in cutting interest rates has provided the Canadian Dollar with some short-term relief, but deeper-seated economic risks imply the respite is likely to be short-lived. The central bank identified two potential scenarios for the economy: one in which trade tensions gradually fade, enabling inflation to anchor around the 2% target, and another in which a protracted trade war unleashes a sharp slowdown and Canadian recession. Markets already expect additional cuts, perhaps as early as June, based on how U.S. trade policy develops over the next few months. Since the BoC is holding back, global trade direction will probably determine its next policy action. The Bank of Canada kept rates unchanged, providing a short-term lift to the Canadian Dollar. But with continued trade risks and economic uncertainty, rate cuts are likely to resume soon, with markets looking to June for the next likely move. The BoC’s outlook continues to be highly sensitive to U.S. trade policy evolution. •  The Bank of Canada (BoC) left interest rates unchanged, surprising the markets in its first rate pause since the rate easing cycle kicked off in June last year. •  The Canadian Dollar (CAD) picked up, growing 0.7% relative to the U.S. Dollar after the rate hold. •   The BoC identified prominent trade-related concerns and worldwide uncertainties in its Monetary Policy Report. •  Two scenarios were presented: one with trade tensions softening, and the other with a prolonged trade war that results in a Canadian recession. •   Inflation would fall to 1.5% in the less severe scenario but would temporarily rise to 3.0% if trade tensions intensify. •  The market is already discounting 50 basis points of rate cuts, potentially beginning as soon as June. • Governor Macklem indicated the BoC stands poised to act “decisively” should the situation deteriorate, hinting that the suspension might prove transitory. The Bank of Canada has opted to leave interest rates unchanged, exercising prudence as it observes how trade tensions abroad will pan out. The break is providing the central bank with extra time to evaluate the risks confronting the Canadian economy, particularly with lingering uncertainty regarding U.S. trade policy. The move reflects that although the bank is in no hurry to further cut rates, it is still worried about what’s ahead. EUR/USD DAILY PRICE CHART CHART SOURCE: TradingView With the rate decision, the Bank of Canada also released two potential future scenarios for the economy. One would prefer a resolution to trade tensions in peace, which would see the economy gradually slow down before resuming stable expansion. The other is that the economy could experience a deeper downturn if trade tensions persist, which might trigger a recession. The signal is unmistakable: while the bank has stopped short for the time being, it stands ready to act if necessary to backstop the economy. TECHNICAL ANALYSIS USD/CAD pierced below crucial levels of support after the Bank of Canada left rates unchanged, reaffirming bearish pressure in the near term. The pair fell below its 50-day moving average, indicating a change in sentiment against the Canadian Dollar. Momentum oscillators such as the Relative Strength Index (RSI) are also trending lower, indicating possibility of more downside if the pair cannot regain traction above 1.3700. Traders will be monitoring closely for a firm break beneath the 1.3600 area, which could pave the way for more severe declines, particularly should economic news or trade events enhance the CAD’s prospects in coming weeks. FORECAST If tensions in global trade relax and Canadian economic data begin to stabilize, the Canadian Dollar might be able to sustain its strength in the short term. Softening or abolition of U.S. tariffs would also boost market sentiment, enabling USD/CAD to bounce back above major resistance points like 1.3700. And if growth or inflation surprises to the upper side, the Bank of Canada might postpone further rate cuts, providing a further boost to the CAD. On the negative side, if trade tensions intensify or U.S. tariffs rise, the Canadian economy may experience a more severe slowdown, prompting the Bank of Canada to lower rates earlier and more forcefully than anticipated. This would tend to weaken the CAD, sending USD/CAD higher towards resistance levels. A more precipitous decline in global growth or weak domestic data would put further pressure on the currency, creating space for a move above 1.3800.

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Currencies

USD/CAD Remains Flat Below 1.4350 On Fed Speculation and Canadian Politics

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  • March 24, 2025
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The USD/CAD currency pair begins the week cautiously trading just below the mid-1.4300s as conflicting market signals keep traders and investors nervous. While hopes of an eventual Fed rate cut dampen the US Dollar, lower Crude Oil prices and political instability in Canada—after Prime Minister Mark Carney demanded a snap election—cap the Canadian Dollar’s appreciation. In spite of intraday declines, the pair is still within last week’s range, indicating a lack of direction. With US PMI data and FOMC member speeches coming up, along with volatile oil prices, traders are waiting for new signals to decide the next direction in USD/CAD. KEY LOOKOUTS • Flash PMI prints and comments from prominent Federal Reserve members may steer short-term market sentiment and USD direction. • Short bets on an impending Fed rate-cut cycle are still a dominant force for USD movements and will keep influencing the trend in USD/CAD. • The surprise call for a snap election by Canadian Prime Minister Mark Carney injects uncertainty and could cap any sharp rise in the Canadian Dollar. • As a commodity-based currency, the CAD is still vulnerable to price movements in crude oil, so oil market fundamentals are an essential factor to monitor. Several factors affecting the USD/CAD in the short term need to be monitored closely by traders. Market interest will continue to be on US economic releases, specifically the flash PMI prints and Fed official speeches, which might provide new insights into the central bank’s monetary policy direction. Speculation over a possible Fed rate cut continues to pressure the US Dollar, while political tension in Canada after Prime Minister Mark Carney’s surprise election call might cap Canadian Dollar gains. Also, crude oil price volatility—considering CAD’s high correlation with oil—will be instrumental in determining the pair’s direction. Major areas of focus are future US PMI releases and FOMC speeches, which may influence USD sentiment. Speculation in the market regarding Fed rate cuts and Canada’s surprise election announcement may also impact USD/CAD movement. Also, oil price volatility is still important for the Loonie’s direction. • USD/CAD trades flat below the mid-1.4300s on mixed market signals. • Expectations of a Fed rate cut continue to bear down on the US Dollar. • Dovish Crude Oil prices constrain the Canadian Dollar’s rise. • Political risk increases with Canada’s PM announcing a snap election on April 28. • The market mood remains risk-averse with no definite directional bias. • The market waits for US flash PMI numbers and FOMC member speeches for new indications. • Price volatility in oil will continue to be a primary driver of USD/CAD direction. The USD/CAD pair is stable to start the new week, guided by a combination of economic and political events. Market participants closely monitor the situation unfolding in the US and Canada. On one side, the US Dollar is under pressure as there are growing hopes that the Federal Reserve might have rate cuts in the near term in view of economic slowdown concerns. On the other side, Canada’s political scenario has been given a fresh twist with Prime Minister Mark Carney declaring an unexpected election, raising doubts over future policy and investor sentiment towards the Canadian Dollar. USD/CAD Daily Price Chart Chart Source: TradingView Simultaneously, sentiment across broader markets is subdued as traders consider global economic indicators and geopolitical tensions. The Canadian Dollar, commonly sensitive to commodity prices, is also responding to oil price movements, which significantly determine its relative strength. In the near term, traders are likely to monitor closely the release of US economic data and speeches by Federal Reserve officials, which may provide more insight into the policy direction and its implications for currency movements. TECHNICAL ANALYSIS USD/CAD pair is range-bound, with prices staying just below the mid-1.4300s, indicating a lack of strong directional momentum. The pair has been able to bounce back from initial Asian session lows around 1.4325 but still trades in the wider range set last Friday. In spite of multiple attempts, the pair has failed to break convincingly above the 1.4400 resistance level, which suggests that buyers are reluctant without a definite bullish catalyst. On the negative side, support at the moment is around the 1.4300 level, and a persistent dip below this may draw in new selling interest. Until a break on either side happens, the pair will remain in this tight range, waiting for new impetus from economic news or political events. FORECAST Should market sentiment turn bullish for the US Dollar, perhaps in response to better-than-anticipated US economic news or more aggressive Federal Reserve rhetoric, USD/CAD may try to challenge the 1.4400 resistance level once again. A clear breakout above it may allow for additional upside, particularly if political uncertainty continues to pressure the Canadian Dollar. Also, if the price of oil continues to slide, it will add pressure to the Loonie, thereby supporting the trend in the USD/CAD to the upside. Conversely, in the event of Fed rate cut hopes gaining traction or if disappointing US data come out in the future, the US Dollar is likely to face fresh selling interest, causing USD/CAD to move lower. A drop below the 1.4300 support area may initiate additional weakness towards the 1.4260 or even 1.4200 levels. In addition, any improvement in Canada’s political scenario or a good bounce in crude oil prices might provide support to the Canadian Dollar, raising the risk of decline for the USD/CAD currency pair.

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Currencies

USD/CAD Rallies Back Over 1.4300 Ahead of Fed Rate Decision as Dollar Reverses Slightly and Oil Prices Lose Ground

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  • March 19, 2025
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The USD/CAD currency pair has mounted a rebound from its two-week low of 1.4260, rising back above the 1.4300 mark as market participants look forward to the much-awaited Federal Reserve policy meeting decision. A small recovery in the US Dollar from multi-month lows, together with softer crude oil prices, has given the pair support for the second day in a row. Gains are still capped, however, with investors holding back ahead of the Fed’s interest rate decision and economic forecasts, as well as closely monitoring Chair Jerome Powell’s rhetoric for guidance on the coming rate-cut direction. KEY LOOKOUTS • Market participants will be keeping a close eye on the Federal Reserve’s rate move and economic forecast, paying specific attention to any hints regarding the timing and rhythm of impending rate cuts. • The direction of the USD after the meeting will be important in deciding on the next move of USD/CAD, particularly if Powell sounds more dovish or hawkish than anticipated. • Being an oil-linked currency, the Canadian Dollar is still vulnerable to the movements in oil prices. Any additional weakness in crude oil may still drag the Loonie. • Rising tensions in the Middle East may have an impact on oil supply projections and risk appetite, which could in turn affect oil prices and safe-haven demand for the USD. With the USD/CAD currency pair trading just above the 1.4300 level, market attention continues to be squarely on the next Federal Reserve policy announcement, which is set to give the US Dollar new guidance. Traders will be keenly listening to Fed Chair Jerome Powell’s comments and the revised economic forecasts for hints on the central bank’s future rate-cut trajectory. In the meantime, any substantial move in crude oil prices would impact the Canadian Dollar, as it strongly correlates with oil. Further, tensions in the Middle East are also a possible risk factor that can affect market sentiment and commodity prices, thus impacting the near-term USD/CAD course. USD/CAD remains above 1.4300 prior to the Fed policy announcement, helped by a small US Dollar recovery and lower oil prices. Market focus now centers around Jerome Powell’s remarks for insights into upcoming rate cuts, with geopolitical tensions and oil price actions continuing as main driving factors. • USD/CAD recovers above 1.4300 from a two-week low just below 1.4260. • Small US Dollar recovery from multi-month lows helps the pair. • Traders stay on guard in anticipation of the pivotal Federal Reserve policy announcement. • Fed likely to leave rates steady; attention turns to economic projections and Powell’s comments. • Impending rate-cut indications from the Fed may have a profound impact on USD direction. • Weakening crude oil prices deter the Canadian Dollar, facilitating USD/CAD gains. • Middle East geopolitical tensions may affect oil prices and risk mood, which can impact the pair. The USD/CAD currency pair is in the limelight as markets globally await the outcome of the closely watched Federal Reserve policy meeting. As no interest-rate change is anticipated, investors are following keenly the Fed’s revised economic forecast and comments from Chair Jerome Powell. These observations will prove to be pivotal in determining the central bank’s attitude towards upcoming monetary policy, especially in context to future interest rate reductions later this year. The result of this meeting is expected to influence overall market sentiment and direct currency movements in the subsequent sessions. USD/CAD Daily Price Chart Chart Source: TradingView While meanwhile, wider economic conditions still influence the USD/CAD forecast. Oil prices, which heavily influence the Canadian economy, have been revealing their volatility, providing another source of uncertainty. Furthermore, heightened tensions in the Middle East are closely watched, as they have the potential to affect global energy markets and investor mood. Since there are more than one factor involved, market players are walking on eggshells, waiting for more definitive indications before making firm actions. TECHNICAL ANALYSIS USD/CAD has been able to bounce from the recent support level around 1.4260, showing buying interest at lower levels. The pair recovering above the 1.4300 level shows a possible short-term bullish tilt, although the momentum is moderate. Traders will be monitoring a sustained move above this level to confirm further upside potential. On the negative side, if the pair cannot remain above 1.4300, it will go back to the recent support zone, whereas resistance levels at 1.4350 and 1.4380 may prove to be obstacles for any potential rise. FORECAST In case the Federal Reserve retains a dovish tone and avoids any indication of near-term rate cuts, the US Dollar is likely to move even higher, possibly taking USD/CAD up. A strong push through the 1.4300 level can create space for the pair to challenge the subsequent resistance levels at 1.4350 and 1.4380. Further deterioration in crude oil prices can also fuel upside movement in the pair, as the Canadian Dollar remains highly sensitive to movements in the oil market. An aggressive bullish break can even lead to a run-up to the 1.4400 area in the short term. Conversely, if the Fed indicates a dovish turn or suggests rate cuts earlier than anticipated, the US Dollar can come under fresh pressure, and that would initiate a decline in USD/CAD. A breakdown below the 1.4260 support could speed up selling pressure, taking the pair down to 1.4220 or even lower. Furthermore, any sudden surge in crude oil prices or de-escalation of geopolitical tensions would bolster the Canadian Dollar, leading to further losses for the pair.

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Currencies

USD/CAD Remains Resilient Amid Trade Tensions and Political Uncertainty in Canada

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  • March 10, 2025
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The USD/CAD currency pair remains strong around the 1.4350 level, indicating an upside bias in the face of rising trade tensions and increasing political uncertainty in Canada. The Canadian Dollar is under pressure after China imposed a 100% tariff on major Canadian exports, escalating a wider trade war. In addition, speculation regarding an early federal election in Canada contributes to market uncertainty. While the US Dollar is being burdened with the fear of a possible economic downturn, increasing US Treasury yields provide some respite. With shifting global trade dynamics and unfolding political events, USD/CAD remains in focus for market players. KEY LOOKOUTS • China’s imposition of 100% tariff on Canadian exports can be a big burden for CAD, which could keep USD/CAD in bearish grip in the near future. • Increased speculation regarding an early federal election by PM Mark Carney could enhance volatility and investor risk aversion against the Canadian Dollar. • Albeit economic slowdown fears, increasing US Treasury yields could potentially cap downside pressure on the USD in the next few sessions. • Investors will be keenly observing how fresh US and China tariffs redefine North American trade flows and impact USD/CAD sentiment. The USD/CAD currency pair is charting a complicated course defined by increased trade tensions and political uncertainty. The Canadian Dollar is still on the back foot after China levied a 100% tariff on major Canadian exports, further heating up the ongoing trade war. Speculation surrounding an early federal election in Canada under Prime Minister Mark Carney further obscures the economic outlook. Simultaneously, the US Dollar is under pressure from fears of a possible slump in the US economy, although increasing Treasury yields are providing some support. As the world markets process these events, the USD/CAD pair remains steady around 1.4350, retaining its bullish bias. USD/CAD remains firm around 1.4350 as rising trade tensions and political instability in Canada counteract CAD weakness, while US economic worries limit Dollar strength. • USD/CAD is trading near 1.4350 with a bullish bias as global trade uncertainties and political instability in Canada keep the USD/CAD steady. • China slaps Canadian rapeseed oil, peas, and other goods with a 100% tariff, which fuels trade tensions. • Canadian Dollar is hampered by trade tensions against China and the US affecting investor morale. • Speculation intensifies over Canadian Prime Minister Mark Carney’s possible call for an early election in April or May 2025. • US Dollar softens slightly amid concerns of a US economy slowdown, capping bullish pressure. • Increasing US Treasury yields provide some support to the USD, albeit overall bearish pressure. • Markets remain vigilant in anticipation of the new tariffs effective on March 20, keeping a close eye on geopolitical and economic news. Trade tensions still hold center stage in the economic environment, particularly after China imposed a 100% tariff on a number of Canadian products such as rapeseed oil, peas, and pork. The action follows Canada’s previous tariff moves and has put more pressure on an already strained trade relationship. The move has put Canada’s trade prospects into question, with companies and investors responding to the possibility of affecting exports and the overall economy. These are among a wider global shift that is driven by protectionism, with nations reviewing their trade approach. USD/CAD Daily Price Chart Chart Source: TradingView With added uncertainty, political events in Canada have received more attention. There is speculation that Prime Minister Mark Carney will call an early federal election, potentially late April or early May, ahead of the scheduled October 2025 date. Such political maneuvers would carry high stakes for policy direction and investor sentiment. Conversely, there are also fears emerging about the prospects of the US economy’s growth, even though the economic fundamentals remain under close observation. Against this backdrop, market participants are closely monitoring both trade policies and political actions that may influence the economic environment over the next few months. TECHNICAL ANALYSIS  USD/CAD is showing a robust consolidation trend around the 1.4350–1.4360 level, which reflects a possible accumulation phase. The pair has sustained its bullish setup following recent advances, indicating that buyers remain dominant. Major support is seen at 1.4300, whereas near-term resistance is placed close to the 1.4400 level. A follow-through above this resistance may invite further upside strength, whereas a fall below support may herald a short-term setback. Overall, the pair’s consistent placement close to current highs indicates underlying interest in buying amidst current market uncertainties. FORECAST If trade tensions increasingly become more bearish on the Canadian Dollar, USD/CAD may further extend its climb in the future sessions. Breaking above the resistance level of 1.4400 can bring renewed bullish force, and this may push the pair to test higher levels. Moreover, even the slightest news of political turmoil in Canada, such as an announcement of holding an early election, can support further USD strength against the CAD. Rising US Treasury yields would also offer a basis for sustained upper bias in the pair. Conversely, if diplomatic talks between Canada and her trading partners signal ebbing tensions, the Canadian Dollar may gain stature, piling pressure on USD/CAD downwards. Further, if future US economic numbers indicate a more severe-than-anticipated slowdown, this may detract from investor morale in the US Dollar. A fall below the 1.4300 support level may initiate a corrective move towards lower levels, particularly if global sentiment turns risk-on or oil prices rise, which generally benefits the CAD.

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Currencies

USD/CAD Recover from One-Week Low as Key US and Canadian Jobs Report Looms

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  • March 7, 2025
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The USD/CAD pair recovers from a one-week low, restoring the 1.4300 level as downward bearish Crude Oil prices pressure the Canadian Dollar (CAD) as major employment reports loom from the US and Canada. This is the pair’s first positive action in three days, spurred by repositioning trades and market expectations of the US Nonfarm Payrolls (NFP) release. Nevertheless, a persistent US Dollar (USD) selling bias, spurred by Trump trade tariffs concerns and expected Federal Reserve (Fed) rate cuts, restricts further rallies. In turn, Trump’s short-term tariff reprieves for Canada and Mexico alleviate trade tensions, possibly supporting the CAD and capping USD/CAD’s upside. Traders now await job data releases for clearer directional cues. KEY LOOKOUTS • The pair recovers above 1.4300, snapping a three-day losing streak as traders reposition ahead of key US and Canadian employment data. • Bearish crude oil prices weaken the Canadian Dollar, acting as a tailwind for USD/CAD, but potential BoC policy decisions could cap gains. • Ongoing USD selling, fueled by fears of Trump’s trade tariffs and potential Fed rate cuts, keeps the pair’s bullish momentum in check. • The US Nonfarm Payrolls and Canada’s employment report will be major drivers, dictating the near-term price action and investor sentiment in USD/CAD. The USD/CAD pair recovers from a one-week low, rising back above 1.4300, as the market players reposition prior to the US Nonfarm Payrolls (NFP) data and Canada’s employment numbers. Poor Crude Oil prices are still depressing the Canadian Dollar (CAD), supporting the pair slightly, but the hopes that the Bank of Canada (BoC) will soon halt rate cuts could cap the pair’s upside. At the same time, a persistent US Dollar (USD) selling bias, driven by Trump’s trade tariffs and uncertainty regarding possible Federal Reserve (Fed) rate reductions, contributes to the uncertainty. With market actors waiting for new employment statistics, the short-term prospects for USD/CAD continue to be reliant on economic releases and general risk sentiment. The USD/CAD currency pair bounces higher around 1.4300 due to poor Crude Oil prices and repositioning for major US and Canadian jobs data. Yet, the USD selling bias due to Trump’s trade policy and possible Fed rate cuts might cap higher gains. Sellers now look to NFP and Canada’s employment report for more direction. • USD/CAD rallies from a week low, ending a three-day losing streak due to market repositioning. • Bearish crude oil prices weigh on the Canadian Dollar, aiding USD/CAD’s upside. • Fears of Trump’s trade tariffs and possible Fed rate cuts constrain the US Dollar’s strength. • Speculation that the Bank of Canada might leave rates unchanged might cap USD/CAD’s advances. • Traders wait for the NFP report, which will be important in forming USD price action. • Canadian employment numbers will offer additional guidance for the pair’s direction. • Trump’s exemption of Canadian and Mexican imports from tariffs for one month mitigates fears of trade wars, weakly bolstering the CAD. The USD/CAD pair continues to be under spotlight as the release of US and Canadian employment reports is awaited by traders with anticipation. The releases will offer major indications of both economies’ health and might sway monetary policy moves in the future. Market participants are also intently observing the global economic landscape, especially economic policies and trade relations, which have a significant influence on the sentiment of investors. With evolving trade agreements and central banks monitoring economic stability, traders are aligning themselves depending on possible changes in policy and economic outlook. USD/CAD Daily Price Chart Chart Source: TradingView Another significant determinant of market sentiment is the effect of crude oil prices on the Canadian economy. Being an oil-exporting country, Canada’s economic performance is directly related to the movement in oil demand and supply. Furthermore, recent trade policy developments, such as temporary tariff relief on Canadian and Mexican products, are being watched for their long-term effects on trade relations and economic growth. As investors wait for major employment figures, sentiment is still cautious, and future direction will be based on general economic data and geopolitical events. TECHNICAL ANALYSIS USD/CAD pair has rebounded from a one-and-a-half-week low around the 1.4240-1.4235 area, retaking the 1.4300 level. This bounce indicates a possible short-term support area around 1.4240, and the 1.4350-1.4380 area could be the next resistance point. Despite this, the pair is still at risk of negative moves in a persistent bear trend in the US Dollar (USD). Should bearish selling intensify, breaking below 1.4240 may pave the way for continued losses to 1.4200 or worse. Meanwhile, momentum oscillators such as the Relative Strength Index (RSI) and Moving Averages provide a neutral to slightly bearish inclination, with market participants holding out for vital employment releases to confirm directional themes. FORECAST If the US employment figures beat expectations and favor the US Dollar (USD), the USD/CAD pair may pick up more steam. A move above the 1.4350 resistance level can take the pair to the 1.4380-1.4400 region, where more bullish momentum can be initiated. Additionally, if crude oil prices keep falling, the Canadian Dollar (CAD) can weaken, further favoring an up move in USD/CAD. A hawkish policy from the Federal Reserve (Fed) or rising market risk aversion would also propel the pair higher as investors turn to safe-haven assets. Conversely, softer US job data or economic slowdown signals would trigger a fresh USD sell-off, sending USD/CAD back towards the 1.4240 support area. Should this level be broken, the next key support is around 1.4200, which would leave the door open for further declines. Also, if the Bank of Canada (BoC) is to indicate a more stable or hawkish monetary policy, this might make the CAD stronger, capping gains for USD/CAD. Reversal of crude oil price also might lend some support to the Canadian Dollar, making it more likely that the pair could drop.

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Currencies

USD/CAD Price Forecast: Bulls Target 1.4450 as Momentum Builds

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  • February 27, 2025
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The USD/CAD currency pair maintains its upward momentum, moving above 1.4350 and targeting the important psychological resistance of 1.4450. Technicals such as the 14-day Relative Strength Index (RSI) remaining above 50 and the pair above the nine- and 14-day Exponential Moving Averages (EMAs) validate a building short-term trend. A decisive breach above 1.4450 would set the stage for a retest of the 1.4793 level, last touched in March 2003. On the downside, initial support is at the nine-day EMA of 1.4286, and a breach below this would set the stage for a more significant correction towards the two-month low of 1.4151. KEY LOOKOUTS • USD/CAD continues in an uptrend, staying above major EMAs and boosted by RSI above 50, indicating potential extension to 1.4450 resistance. • A strong break above the psychological level of 1.4450 has the potential to drive the pair to 1.4793, last visited in March 2003. • Near-term support is at the nine-day EMA of 1.4286, with a breakdown below potentially prompting a move towards the two-month low of 1.4151. • A failure to maintain gains above 1.4450 may erode bullish pressure, triggering a possible correction to the three-month low of 1.3927. The USD/CAD currency pair remains in firm bullish mode on the back of its standing above dominant moving averages and the 14-day RSI remaining above 50. The near-term attention is at the psychological resistance level of 1.4450, with a clean break seen taking the pair up towards the 1.4793 level last recorded in March 2003. On the downside, the nine-day EMA level of 1.4286 acts as the first point of support, followed by the 14-day EMA level of 1.4284. A decline below these levels may undermine the short-term bullish perspective and direct the pair to the two-month low of 1.4151. The traders should be careful of a possible pullback if the pair is unable to hold above 1.4450, as it can create a more serious correction towards the three-month low of 1.3927. USD/CAD continues to stay bullish, trading above important EMAs and bolstered by an RSI reading above 50. A break above 1.4450 would drive the pair towards 1.4793, and support at 1.4286 is important to avoid a further pullback. • USD/CAD continues its winning streak, trading above important EMAs and holding a strong short-term bullish bias. • The psychological level of importance at 1.4450 is the next target, with a break higher potentially paving the way to 1.4793. • The nine-day EMA at 1.4286 is the nearest support, closely followed by the 14-day EMA at 1.4284. • The 14-day Relative Strength Index (RSI) is still above 50, supporting the bullish outlook and potential for further gains. • A break above 1.4450 may cause a retest of the 1.4793 level, last seen in March 2003. • Failure of the pair to hold above 1.4450 may initiate a corrective decline to the two-month low of 1.4151. • A more pronounced fall may test the three-month low of 1.3927, which is still a major support level for the long-term trend. The USD/CAD currency pair remains to be of much interest as market forces determine its direction. Releases of economic data, interest rate measures, and international trade patterns are key to determining the performance of the currency pair. Economic stability and monetary policy decisions drive the strength of the U.S. dollar and influence its exchange rate with respect to the Canadian dollar. Further, Canada’s commodity-driven economy, relying heavily on energy exports such as oil, watches its currency waver with changes in the trend of the energy markets. This external impact affects USD/CAD’s trajectory and has USD/CAD under keen observation from traders and investors alike. USD/CAD Daily Price Chart Chart Source: TradingView Political developments and domestic economic reports in both nations contribute further to the movement of USD/CAD. Market mood, investor sentiment, and risk appetite drive changes in demand for the Canadian and U.S. currencies. The bilateral trade relations between the two countries also contribute to the dynamics, with alterations in tariffs, free trade agreements, or cross-border investments affecting exchange rates. Moreover, employment figures, inflation readings, and consumption spending patterns of the U.S. and Canada indicate economic wellness, driving market expectations. Consequently, USD/CAD is still a major pair in the foreign exchange market, showing general economic trends and world financial conditions. TECHNICAL ANALYSIS USD/CAD is still firm as the pair continues to stay above important support levels, showing continued bullish momentum. The price continues to stay above the nine- and 14-day Exponential Moving Averages (EMAs), confirming short-term strength. Also, the 14-day Relative Strength Index (RSI) staying above 50 indicates continued buying pressure. The next important level of resistance is at 1.4450, a psychological level, with a breach likely to push the pair to higher levels. On the downside, support currently lies near the nine-day EMA at 1.4286, and a breach below this may signal a change in momentum. Overall, technical indicators reflect an upward bias, but traders should watch key levels for possible trend reversals. FORECAST USD/CAD’s bearish momentum is still intact, and the pair is looking towards the crucial resistance of 1.4450. A sustained crossover above this psychological level can open the doors towards higher levels, and the next big target is 1.4793, a level witnessed as recently as March 2003. The upward trend is bolstered by technicals and solid market sentiment, and the U.S. currency has been firm amid economic stability. If the buying pressure persists, USD/CAD may continue to appreciate as investors continue to be bullish on the pair’s long-term outlook. On the bearish side, any inability to move above 1.4450 may initiate a corrective pullback, taking the pair to near-term support at 1.4286. A clear break below this level may undermine bullish momentum and take USD/CAD to the two-month low of 1.4151. Further downside pressure can develop if bearish sentiment intensifies, with the pair likely testing the three-month low of 1.3927. Market uncertainties, changing risk appetite, and external economic factors may play a role in reversing the situation, making these support levels very important

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Currencies

USD/CAD Reversal: US Dollar Recovery vs Tariff-Fueled Loonie Jitters

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  • February 24, 2025
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The USD/CAD currency pair recovered around 1.4220 in European trade as the US Dollar regained nearly all of its intraday decline even as dismal US flash PMI data arrived, with market sentiment still subdued amid impending threats of 25% tariffs on imports from Canada. Technical indicators such as a falling triangle pattern and a 20-period EMA indicate a range-bound trend with additional downside risk if important support levels are violated, but a break higher may drive the pair to higher resistance levels. The USD/CAD pair rebounds as the US Dollar recovers from its intraday losses despite disappointing US flash S&P Global PMI data for February. Investor sentiment is becoming cautious against the backdrop of impending fears about possible 25% tariffs for Canadian imports from President Trump, as the Bank of Canada’s Governor threatens of drastic economic ramifications in case tariffs are levied. KEY LOOKOUTS • Move below 1.4151 support, potentially indicating a greater downtrend and driving the pair towards December lows. • US Dollar, since its strength would offset poor US PMI figures and have a strong impact on USD/CAD movements. • Potential tariff news from the US government, since policy changes would again affect investor morale and Loonie stability. • Upside breakout above 1.4246, which would initiate a rally towards resistance levels if market sentiment is supportive. The USD/CAD currency pair has been resilient with a significant rebound to close to 1.4220 as the US Dollar regained intraday losses. Even though poor flash PMI data showed contracting service sector activity in the US, the USD was strong, which helped the Loonie pair. Yet, ongoing uncertainty over prospective 25% tariffs on Canada continues to support a defensive stance for the Canadian Dollar, as President Trump’s review of tariffs further fuels investor anxiety. US Dollar strength will counter weak US PMI figures, and hence the currency recovery will be a key driver for USD/CAD action. Tariff uncertainty is still a major factor, so watch closely for any policy changes by the US administration that may further erode investor confidence and Loonie stability. A fall below 1.4151 may see further selling towards December lows, but good US Dollar resilience holds the pair up even in the face of poor PMI data. Tariff uncertainty is still a major issue, and a breakout above 1.4246 on the upside may release further bullish momentum. • The USD regained its losses rapidly, supporting the pair to recover around 1.4220. • Even after disappointing US flash PMI, the strength of the USD is a major driver. • Speculation of possible 25% tariffs on Canadian imports continues to disturb investor confidence. • The pair is in a descending triangle with a support around 1.4151. • Overlapping of the Loonie price by the 20-period EMA indicates a sideways trend. • The RSI is still in the 40-60 region, showing indecision among market participants. • A bullish move above 1.4246 would potentially see the pair touching resistance areas at 1.4300 and 1.4380, or face further downtrends if it breaks below 1.4151. The US Dollar made a significant comeback in European trading sessions, recovering the majority of its previous losses following miserable US flash S&P Global PMI data. Investors seem to be taking the strength of the US Dollar despite the mixed signals from the economy, showing confidence in the overall strength of the currency. The USD/CAD currency pair has remained strong as the US Dollar recovers from previous losses despite poor US flash PMI figures for February. Investors are looking at the prospects for US monetary policy and the possible effect of an economic slowdown, which has not had a significant impact on the strength of the US Dollar. USD/CAD Daily Price Chart Chart Source: TradingView Meanwhile, market players are still wary as a result of impending threats from possible tariff measures. With President Trump considering not imposing 25% tariffs on Canadian imports and Bank of Canada Governor Tiff Macklem sounding the alarm about dire economic consequences, sentiment on the Canadian dollar is still guarded in this state of uncertainty. TECHNICAL ANALYSIS USD/CAD chart is characterized by a falling triangle formation, with significant support and resistance levels portending future direction. The 20-period EMA overlap signals that there is no strong momentum, while the 14-period RSI, which is always within a neutral range, points to the fact that traders are presently indecisive. Such technical indicators suggest that the market is in consolidation mode, and future price action will be guided by a definitive break from the present balance. FORECAST In case market sentiment turns negative, a breakdown below significant support levels would increase selling pressure, driving the pair towards lower levels seen in earlier sessions. Such a decline may be supported by ongoing economic uncertainties and policy issues, which would lead investors to take a more risk-averse approach that may extend the bearish trend. Conversely, if there is renewed buying interest and momentum picks up, the pair might rally towards higher resistance levels, re-establishing a more bullish trading regime. This would be an indication of enhanced confidence in economic indicators and an adjustment of policy risks, leading to a broader market rebound.

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Currencies

USD/CAD Sustains the Levels with US Jobless Statistics and BoC Rate Rumors

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  • February 21, 2025
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USD/CAD sustains its levels at 1.4150 as market participants consider contradictory economic cues from the US and Canada. The US Dollar is under pressure in the face of higher-than-projected jobless claims and unpredictable Federal Reserve policy, whereas the Bank of Canada (BoC) is likely to slow down rate reductions owing to persistent inflation. Market mood was lifted by US President Donald Trump’s insinuations about trade talk improvements with China but may be anchored by Canadian lumber tariffs. Participants are anticipating more market direction in the release of the forthcoming US PMI figure, the Canadian Retail Sales, and the address of BoC Governor Tiff Macklem. KEY LOOKOUTS • Higher-than-anticipated jobless claims at 219,000 would have a dampening effect on the US Dollar, affecting USD/CAD moves amidst contrasting Federal Reserve policy cues. • Soaring inflation in Canada would compell the BoC to postpone rate cuts, affecting the Canadian Dollar and pushing USD/CAD volatility. • The US S&P Global PMI data due soon will give us a read on economic activity, influencing Fed policy expectations and affecting the USD/CAD pair. • Fresh US tariffs on Canadian wood might weigh on the CAD, escalating economic uncertainty and further pressuring USD/CAD moves in the near term. USD/CAD continues to be under the radar as market players await significant economic reports and policy moves from the US and Canada. Higher-than-projected US jobless claims have pressured the US Dollar, with mixed Federal Reserve signals compounding market uncertainty. In Canada, ongoing inflation could compel the Bank of Canada to hold off on rate cuts, offering potential support for the Canadian Dollar. Meanwhile, the publication of US PMI data will provide new information about economic activity and impact market sentiment. Furthermore, the effect of new US tariffs on Canadian lumber could put pressure on the CAD, introducing another element of volatility into the USD/CAD pair. USD/CAD holds firm as investors weigh US jobless claims, Federal Reserve cues, and Bank of Canada policy forecasts. US PMI and Canadian Retail Sales will offer major market guidance. In the meantime, fresh US tariffs on Canadian lumber might push the CAD lower, boosting volatility. • The currency pair holds firm against recent losses, with investors looking at economic data and policy news from the US and Canada. • Weekly claims increased to 219,000, higher than the expected 215,000, putting pressure on the US Dollar with worries over labor market stability. • Fed officials mention inflation threats and possible stagflation, keeping markets in doubt over future interest rate moves and how they will affect the USD. • Higher Canadian inflation could encourage the BoC to hold off on rate cuts, potentially to support the Canadian Dollar versus the US Dollar. • The S&P Global PMI reading will give insight into US economic activity and affect sentiment towards the USD. • The announcement of additional tariffs on Canadian lumber by President Trump can pressure the CAD due to Canada being a significant exporter. • Retail Sales data and BoC Governor Tiff Macklem’s speech are being followed closely by traders for additional policy cues that will affect USD/CAD action. The USD/CAD currency pair is still in focus for traders due to economic signals from the US and Canada dictating market moods. The US has released the latest report on jobless claims, where higher-than-projected filings indicate possible changes in the labor environment. Discussions around inflation and money policy persist with Federal Reserve members citing worries regarding meeting the 2% inflation rate. On the Canadian side, inflation is still high, fueling speculation that the Bank of Canada will postpone its expected rate reductions. This move could have a profound impact on businesses and consumers, influencing economic expectations for the next few months. USD/CAD Daily Price Chart TradingView Prepared by ELLYANA Also, global trade updates bring an added dimension of interest to the USD/CAD forecast. US President Donald Trump’s revelation of new tariffs on Canadian timber may impact Canada’s export economy, causing alarm about trade relations and economic stability. Meanwhile, market players are eagerly awaiting Canada’s Retail Sales report and Bank of Canada Governor Tiff Macklem’s speech to learn more about the country’s economic condition. These forces, coupled with more general economic trends, will continue to influence the economic narrative for both nations. TECHNICAL ANALYSIS USD/CAD continues to consolidate above the 1.4150 handle following previous declines, signifying a period of market indecision. The pair is met with near-term resistance at 1.4200, a breakout above which may portend additional upside momentum. On the negative side, the major support level is still 1.4120, and a breakdown below could lead to further decline. The 50-day moving average is also serving as dynamic support, and RSI is close to the neutral level, indicating neither overbought nor oversold levels. Traders will be closely monitoring price action for confirmation of the next move, particularly with the release of economic data soon. FORECAST If USD/CAD can break above the 1.4200 resistance level, then it may signal further upward movement. Strong US economic data, especially robust PMI readings, may support the US Dollar, pushing the pair upwards. If the Bank of Canada also gives a hint that it will proceed with caution regarding rate cuts given the ongoing inflation, the Canadian Dollar may dip, further fueling USD/CAD. Any fresh global uncertainty or risk-off mood could also propel the USD as a safe-haven currency, taking the pair to the next resistance level around 1.4250-1.4300. On the bearish side, if USD/CAD is unable to hold above the support level of 1.4150, it may experience more selling pressure. Poorer US economic news, such as weak PMI numbers or higher jobless claims, could bear down on the US Dollar, causing the pair to fall. In addition, if the Bank of Canada becomes more hawkish or conveys optimism over Canada’s economic strength, the Canadian Dollar will likely get stronger, and USD/CAD will be headed for the next levels of support at 1.4120 and 1.4080. Any uptick in Canada’s Retail Sales will also drive CAD strength and heighten the probability of further

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