The USD/CAD currency pair has shown signs of recovery, bouncing back from a fresh weekly low reached during the Asian trading session. Despite this recovery, a mix of market factors is curtailing any significant upward movement ahead of a crucial announcement regarding reciprocal tariffs from President Trump.
After dipping below the 1.4300 level during the Asian session, the USD/CAD has managed to stabilize following a pullback from the near three-week high of 1.4415. However, traders appear hesitant to engage in aggressive buying, preferring instead to monitor the market closely in anticipation of Trump’s forthcoming tariffs announcement.
Concerns surrounding the potential economic impact of these tariffs are weighing heavily on the Canadian Dollar, especially amidst speculation that the Trump administration may impose global tariffs of up to 20% on various trading partners. Despite these worries, increases in crude oil prices are providing some support to the Canadian Dollar. Furthermore, ongoing expectations that the Federal Reserve will initiate a new round of rate cuts are placing pressure on the U.S. Dollar, limiting gains for the USD/CAD pair.
From a technical standpoint, the currency pair has demonstrated some level of resilience, particularly bouncing off the 100-day Simple Moving Average support. This, coupled with neutral indicators on the daily chart, suggests a cautious approach is warranted. A decisive move below the 1.4300 level could prompt bearish traders to act, potentially leading to a further decline toward last week’s low of around 1.4235. A successful breach of this level would likely trigger additional selling pressure.
Should the USD/CAD drop below the 1.4200 level, it may be on track to test the year-to-date low near the 1.4150 level reached in mid-February. Conversely, any upward momentum could face resistance around the 1.4350 region. A break above this level may incite short-covering, allowing the pair to reclaim the 1.4400 level and potentially advance towards higher resistances, including 1.4440 and the psychological barrier of 1.4500, ultimately targeting the monthly swing high around 1.4545.
