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USD/CAD Maintains Price Above 1.4300: Market Awaits Fed Powell Testimonies Despite Escalation of Tariffs

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  • February 11, 2025
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USD/CAD is currently trading above 1.4300, consolidating as investors await Fed Jerome Powell’s testifying for future interest rate policies. The Fed kept its key rates unchanged at 4.25%-4.50%, with no cuts expected in 2025. In the meantime, the 25% tariffs of Trump on steel and aluminum create pressure on the Canadian economy, making the outlook for the CAD bearish. Market participants also keep an eye on US CPI data for further direction. Technical indicators remain sideways, while resistance is present at 1.4380 and the pair may rise as high as 1.4500. Support below 1.4270 could push prices lower. KEY LOOKOUTS • Investors await Powell’s speech to know whether the Fed is going to extend its interest rates at 4.25%-4.50% in 2025 or not. • 25% tariffs on steel and aluminum may weigh heavily on the Canadian economy, bringing a bearish trend for CAD/USD. • Tocky Wednesday, Consumer Price Index (CPI) data will be out. This will impact market sentiment and further provide cues about inflationary trends affecting Fed policy. • The upside would be further possible only if the USD/CAD breaks above 1.4380. If it drops below 1.4270, a deeper correction can be witnessed. Wednesday’s Fed testimony by Chair Jerome Powell and the subsequent silent of interest rate policy keep the USD/CAD under the spotlight, with investors watching carefully for further clues. Since the Fed has held rates at 4.25%-4.50%, it is of immense interest to see if cuts are delayed until the end of 2025. Meanwhile, tariffs imposed by Trump on steel and aluminum at 25% are going to devastate Canada and will continue to reinforce a bearish view of the CAD. The US CPI data is going to be an important driver for expectations around inflation and monetary policy. Tactically, key resistance is seen at 1.4380. A clear break above here should send prices higher, while any move below 1.4270 should put support at risk and ideally could see a stronger fall. The USD/CAD pair still trades above the 1.4300 line as investors keep an eye out for Fed Chair Powell’s testimonial for key interest rate policies. The announcement of 25% tariffs imposed by Trump on steel and aluminum is weighing against the Canadian Dollar, while positive US CPI later in the session will have enough influence on sentiment. Key level to watch up: 1.4380. Key level to watch downside: 1.4270 • The pair remains steady pending key economic events. • Traders look for signals on how long the Fed will keep rates at 4.25%-4.50%. • The Canadian economy faces pressure as the U.S. imposes tariffs on steel and aluminum. • The inflation report on Wednesday could influence future Fed policy decisions. • Investors remain uncertain, leading to a tight trading range of 1.4270-1.4380. • A breakout above this level could push USD/CAD toward 1.4500. • A break below might push the price lower to 1.4195 and then to 1.4120. The USD/CAD is still trading flat above 1.4300, as traders are waiting for Fed Chair Jerome Powell to testify before Congress. Market participants are looking for clues on how long the Federal Reserve will keep interest rates at 4.25%-4.50%, with many analysts expecting no rate cuts in 2025. Concerns over Trump’s 25% tariffs on steel and aluminum continue to weigh on the Canadian economy, as Canada is the largest exporter of aluminum to the United States. Such levies may mean higher inflation rates in the US, and by extension, that the Fed must continue its existing monetary policy much longer. USD/CAD Daily Price Chart TradingView Prepared by ELLYANA USD/CAD is trading between 1.4270 and 1.4380; 1.4380 serves as a pivotal resistance point for the pair. A breakout above this could take the pair towards 1.4500, whereas a push below 1.4270 could lead to more losses toward 1.4195 and 1.4120. Another event that markets are eagerly awaiting is the U.S. Consumer Price Index (CPI) data scheduled on Wednesday; this will have considerable ramifications in shifting market sentiment and increasing demand for USD. With various economic and political factors present, the outcome of the USD/CAD seems uncertain, but Powell’s testimonial and then the CPI to be released shall be the primary drivers for a future price shift. TECHNICAL ANALYSIS In the USD/CAD, consolidation is seen over a tight band of 1.4270-1.4380 due to the scheduled economic events; the 50-period Exponential Moving Average has been seen resisting the upside trend at around 1.4365. Meanwhile, the 14-period Relative Strength Index (RSI) is in the 40.00-60.00 area, showing a neutral to sideways trend. A break above 1.4380 would be likely to push the pair to the round-level resistance of 1.4500, and then to the January 30 high of 1.4600. A break below 1.4270 could be seen as a trigger for further losses down to the December 10 high of 1.4195 and then to the December 11 low of 1.4120. Traders will watch for the volumes to build and confirmation signs before making a directional bet. FORECAST Should USD/CAD break out of the resistance line at 1.4380, further gains could occur for the currency, and that’s towards round number resistance 1.4500. An increased breakout through the latter would lead the currency pair to move further to January 30 highs at 1.4600 with the boost in positive economic numbers from the US or more hawkish speeches by Fed Chairman Powell. Additionally, sustained inflationary concerns in the U.S., potentially fueled by Trump’s 25% tariffs, could lead to higher USD demand, reinforcing the pair’s upward trajectory. If the Fed delays rate cuts throughout 2025, the U.S. dollar may strengthen further, keeping USD/CAD in an uptrend. On the downside, if USD/CAD goes below the February 5 low of 1.4270, it might reflect increased bearish pressure that could drag the pair toward the December 10 high of 1.4195. Further below this level, it would open the door for a possible dip toward the December 11 low of 1.4120. Any signs of a softer U.S. Release of CPI data or dovish comment from Powell will weaken USD; hence the

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Currencies

USD/CAD jumps to six-day high: Impact of Trump’s tariffs and BoC rate cuts on currency pair

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  • February 3, 2025
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The USD/CAD has surged to almost 1.4700 after US President Donald Trump imposed a 25% tariff on imports from Canada, which is due to take effect on Tuesday. The move has been made while increasing tariffs generally, including the 25% duty on Mexican goods and 10% on Chinese exports, thus increasing tensions in trade. This, in conjunction with the rate differential between the US Federal Reserve and the Bank of Canada, has driven strength in the pair. The rate cut by the Bank of Canada recently and plans for asset purchases contrast with the Fed’s decision to keep rates unchanged, boosting the USD even further. Meanwhile, as retaliation in this trade war from Canada, Mexico, and China looms over, the USD/CAD pair keeps going up for its sixth consecutive trading session. KEY LOOKOUTS • Locking in a 25% tariff on imports from Canada will increase trade tensions and the exchange rate volatility. • The interest rate differential between the Fed and BoC has been the best driver of the current USD/CAD price action, with the Fed holding on to its steady rates. • Canada, Mexico, and China have vowed to retaliate against the US tariffs, which could create broader market uncertainty and influence USD/CAD. • A rising DXY, reflecting USD strength against major currencies, will continue to support the upward momentum of USD/CAD. The USD/CAD pair continues to gain momentum, recently reaching near 1.4700, driven by a combination of factors. The key catalyst has been US President Trump’s imposition of a 25% tariff on Canadian imports, which is set to take effect on Tuesday, contributing to escalating trade tensions. In addition, the ongoing interest rate divergence between the US Federal Reserve, which has kept rates steady, and the Bank of Canada, which recently cut its rate, is supporting the strength of the USD. This, coupled with retaliation threats from Canada, Mexico, and China, and a rising US Dollar Index, is likely to have the USD/CAD pair continuing its upward trend, creating volatility in the forex market. The USD/CAD pair has rallied to around 1.4700 on the back of Trump’s 25% tariff on Canadian imports and interest rate differentials between the Fed and BoC. Threats of trade retaliation and a rising US Dollar Index add further strength to the pair. • The USD/CAD pair has gained more than 1% and rallied to near 1.4700, as recent tariff announcements have driven the pair. • The United States has applied a 25% tariff to Canadian imports effective on Tuesday and further escalates the trade tension. • Energy exports from Canada will attract a 10% tariff, thus putting pressure on the CAD. • The United States has also applied 25% tariffs to Mexican goods and 10% to Chinese exports, thus creating global trade uncertainty. • The interest rate gap between the Fed (steady rates) and the BoC (rate cut to 3%) boosts USD strength. • Canada, Mexico, and China have promised retaliation, which could further influence USD/CAD movements. • The US Dollar Index (DXY) continues to rise, supporting the overall strength of the USD against other currencies. Trade tensions along with interest rate differentials have really driven this pair upwards; trading near 1.4700. The most significant catalyst is the 25% tariff put upon Canadian imports by the U.S. It comes into play this Tuesday and is in response to other tariffs levied upon Mexican goods and Chinese exports, deepening trade tensions. Canadian exports of energy will also suffer from the effect of a 10% tariff, adding further pressure on the CAD. Rising trade tensions have raised the level of concern and further intensified this weakening of the CAD and support for USD strength. USD/CAD Daily Price Chart Sources: TradingView Prepared by ELLYANA The other main driver behind the recent USD/CAD strength has been the divergence of interest rates in the US Federal Reserve and the Bank of Canada. Although the Fed is steady, the BoC lowered its key rate 25 basis points to 3% just last week. Therefore, interest-rate differential works as a more bullish factor, where the return of the USD is higher compared to the CAD. More to this, a US Dollar Index, DXY, which is also on an uptrend enhances the strength of the USD versus the other strong currencies, meaning more momentum on the USD/CAD pair, which is to experience retaliatory moves from Canada, Mexico, and China, therefore, this pair is still on the path to volatility. TECHNICAL ANALYSIS The latest run of the USD/CAD pair to 1.4700 is one huge breakout, because the pair remains above its significant resistance points. This is further complemented by a series of higher highs and higher lows, giving a strong sign of the bull. A hovering RSI overbought territory sees a potential short-term reversal, though the trend still remains intact. The moving averages, mainly the 50-day and 200-day average, are trending bullishly by crossing over, showing strength in the current uptrend. So long as the pair maintains above the support levels around 1.4600, the least resistance path is northward toward 1.4800, but external factors such as trade developments or changes in markets sentiment can quickly lead to reversal even at unexpected times. FORECAST The USD/CAD pair is likely to continue rising as the interest rate divergence between the US Federal Reserve and the Bank of Canada continues. While the Fed has been steady, the BoC has recently taken a dovish approach with rate cuts, making the USD more attractive than the CAD. Furthermore, continuing US tariffs on Canadian goods in addition to ongoing trade tensions, and a hardening US Dollar Index (DXY), would likely push the pair to fresh highs. However, if USD/CAD sustains above 1.4600 support, the next serious resistance could come around 1.4800, with room for further runs if geopolitical tensions escalate. On the flip side, if the trade tensions were to ease significantly or if the monetary policy unexpectedly changed, it could pull the USD/CAD back. Since the RSI is in an overbought condition, this could be an opportunity for short-term

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Currencies

USD/CAD Struggles Near 1.4300 Amid Tariff Threats and Economic Concerns

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  • January 22, 2025
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The USD/CAD pair trades cautiously near 1.4300 amid heightened economic and political uncertainty. US President Donald Trump’s threat to impose a 25% tariff on Canada has dampened the Canadian economic outlook, prompting a strong response from Canadian Prime Minister Justin Trudeau, who stated that his government is ready to respond to any scenario. Additionally, expectations of a 25 bps rate cut by the Bank of Canada (BoC) following weaker-than-expected inflation data have further pressured the Canadian Dollar. In contrast, the US Federal Reserve is anticipated to hold interest rates steady, amplifying policy divergence. Technically, USD/CAD remains range-bound but shows a firm outlook, with potential for a rally above 1.4518 or a downside break below 1.4120. KEY LOOKOUTS • Follow US-Canada trade developments, as a 25% tariff from Trump will be huge for the Canadian economy and its dynamics in the USD/CAD market. • The upcoming decision of the BoC will likely be 25 bps, which might affect CAD sentiment and the broader economic forecast. • Resistances are seen at 1.4518 and support at 1.4120; it might act as a break out or breakdown point for considerable price action. • Maintain an eye on the fight between the Fed’s hawkish stance and the BoC’s dovish tone, which forms investor emotion and currency trends. USD/CAD now hovers around 1.4300 with market attention still on US-Canada trade wars and differing monetary policies. US President Donald Trump announced a 25% tariff over Canada, where he faces a stiff response from Canadian Prime Minister Justin Trudeau. The BoC has been touted to reduce interest rates by 25 basis points for its meeting, which is expected to follow the rather disappointing inflation data. In sharp contrast, the US Federal Reserve maintains a steady policy that further weighed in against the Canadian Dollar. Technically, this is a range-bound movement of USD/CAD with key levels such as 1.4518 and 1.4120, and any breakout will likely define the directional trend. USD/CAD trades circumspectly near 1.4300 amid US-Canada tariff tensions and expectations of a BoC rate cut. Diverging monetary policies and key technical levels at 1.4518 and 1.4120 remain critical. • Pair trades cautiously with economic and political uncertainties weighing down on market sentiments. • US President Donald Trump proposes a 25% tariff on Canada that raises concerns of economic impacts. • Prime Minister Justin Trudeau says he is prepared to act on any trade issues if tariffs are implemented. • The Bank of Canada is expected to reduce interest rates by 25 bps to 3% in its next policy meeting. • The CPI data for December showed a fall in annual inflation to 1.8%, which has been fueling dovish BoC bets. • The US Federal Reserve is likely to hold interest rates, which will widen the policy gap with the BoC. • USD/CAD is range-bound, with resistance at 1.4518 and support at 1.4120, setting critical breakout levels. The USD/CAD pair trades near 1.4300, reflecting market caution amid heightened economic and political uncertainties. US President Donald Trump’s threat of a 25% tariff on Canada has intensified concerns about the Canadian economy, with Prime Minister Justin Trudeau affirming readiness to counter any challenges. Additionally, expectations of a 25 bps rate cut by the Bank of Canada (BoC), driven by weaker December inflation data, have weighed on the Canadian Dollar. In contrast, the US Federal Reserve’s steady interest rate stance highlights the growing policy divergence between the two central banks. Technically, USD/CAD remains range-bound, with key levels at 1.4518 and 1.4120 likely to dictate the next significant move. USD/CAD Daily Price Chart. Source: TradingView Prepared By ELLYANA US Federal Reserve is expected to maintain its current interest rate policy, highlighting the growing policy divergence between the two economies. This divergence has boosted the appeal of the US Dollar against the Loonie. From a technical perspective, USD/CAD has been range-bound for over a month, trading within the 1.4260-1.4465 band. Key resistance at 1.4518 and support at 1.4120 are critical levels to watch, with a breakout likely signaling the pair’s next major directional move. Market participants remain focused on trade developments and upcoming monetary policy decisions, which could significantly impact the pair’s trajectory. TECHNICAL ANALYSIS From a technical perspective, USD/CAD has been trading in a tight range of 1.4260 to 1.4465 for over a month, reflecting market indecision. The 50-day Exponential Moving Average (EMA) slopes upward near 1.4235, signaling a bullish undertone despite the range-bound movement. Meanwhile, the 14-day Relative Strength Index (RSI) remains within the neutral 40-60 range, indicating a lack of clear momentum. A decisive break above the resistance at 1.4518 could pave the way for a rally toward the psychological level of 1.4600 and potentially the March 2020 high of 1.4668. Conversely, a downside break below the December 11 low of 1.4120 might lead to further weakness, targeting the December 4 high of 1.4080 and the key psychological support at 1.4000. Traders should watch these critical levels for confirmation of the next directional move. FORECAST USD/CAD shows potential for an upward breakout, supported by the 50-day EMA’s upward slope near 1.4235, which reflects a bullish bias. A sustained move above the immediate resistance level at 1.4518 could send the pair further north. A break above that level could then take the pair to round-level resistance at 1.4600 and the March 2020 high of 1.4668. The steady interest rate stance of the Federal Reserve and the vulnerability of Canada’s economy to trade tensions with the US further bolster the upside outlook. Positive momentum indicators and a possible rally in the US Dollar may push the pair to these higher levels. USD/CAD fails to hold above the 1.4260 level, it may come under downward pressure. A break below the December 11 low of 1.4120 may send the pair further down to the December 4 high of 1.4080 and the psychological support at 1.4000. Weak Canadian inflation data, coupled with expectations of a Bank of Canada rate cut, could weigh on the Canadian Dollar. However, a resolution of US-Canada trade tensions or stronger-than-expected

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