Tag: USD/CAD

• USD/CAD has experienced wild swings since Trump took office on Monday.

• Canada’s government plans to respond appropriately to Trump’s tariffs.

• Data on Tuesday revealed that inflation in Canada fell by 0.4%.

The USD/CAD price analysis shows continued uncertainty about Trump’s tariff policies that have caused wild fluctuations. The Canadian dollar strengthened as markets doubted a near-term tariff on Canadian goods. The currency also got support from a monthly inflation number stronger than expected.

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Since Trump took office on Monday, USD/CAD  has experienced wild swings amid tariff uncertainty. At first, the loonie jumped when there was no clear guidance on any near-term tariffs. However, sentiment shifted when Trump later came out to say he was ready to impose a 25% tariff on goods from Canada and Mexico as soon as Feb 1. 

However, by Wednesday, market participants were again optimistic. Canadian Prime Minister Justin Trudeau noted that the government would respond appropriately to Trump’s tariffs. Moreover, he pointed out that the US needs Canada to prosper. Therefore, such tariffs would also hurt the US economy. 

Elsewhere, data on Tuesday revealed that inflation in Canada fell by 0.4%, bigger than the forecast of a 0.7% decline. Nevertheless, the annual figure eased to 1.8%, solidifying bets for a January Bank of Canada rate cut. 

Meanwhile, the dollar remained steady, with traders awaiting more policy clues from Trump later in the day.

USD/CAD key events today

• Canada core retail sales m/m
• Canada retail sales m/m
• US unemployment claims
• President Trump speaks

USD/CAD technical price analysis: Consolidating in wide range

On the technical side, the USD/CAD price failed to break its range resistance and dropped back to the channel support. At the same time, it broke below the 30-SMA while the RSI dipped below 50, suggesting a stronger bearish sentiment. Recent candles show a significant surge in volatility because they are much bigger than previous ones. If this continues, the price will eventually break out of its consolidation to start trending up or down. 

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Currently, bears are approaching the range support. If the price breaks below this level, it will likely reach the 1.4201 support. This will lead to a lower low and the start of a downtrend. On the other hand, bulls might resurface at the range support to push the price higher. In this case, USD/CAD would try to break above the range resistance.

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• Trump’s administration did not give any guidance on tariff plans on Monday.

• Trump told reporters he was considering near-term tariffs on Canada and Mexico.

• Market participants are looking forward to Canada’s inflation data.

The USD/CAD outlook shows a sudden shift in sentiment amid mixed signals on Trump’s tariff plans. The Canadian dollar rallied in the previous session as it became clear that the new administration would not implement tariffs immediately. However, this outlook shifted when Trump hinted at starting next month. 

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On Monday, the greenback collapsed as Trump’s first day in office failed to be as aggressive on policy changes. The new administration did not give any guidance on tariff plans, leading most to believe it would be a gradual shift. As the dollar collapsed, its peers, especially the Canadian dollar soared.

For weeks, market participants had worried that Trump would aggressively implement a 25% tariff on goods imported from Canada. Therefore, the lack of guidance was a relief for the loonie. Such a heavy tariff would hurt the local economy and push the Bank of Canada to cut interest rates further to spur growth. 

However, the trend turned sharply overnight after Trump told reporters he was considering near-term tariffs on Canada and Mexico. According to him, February 1 might be the right time to implement the tariffs. 

Elsewhere, market participants are looking forward to inflation data from Canada, which will shape the outlook for Bank of Canada rate cuts. 

USD/CAD key events today

• Canada CPI m/m
• Canada median CPI y/y
• Canada trimmed CPI y/y

USD/CAD technical outlook: Broad range consolidation

On the technical side, the USD/CAD price fell back into its range area, confirming a false bullish breakout. However, the price made a whiplash move within the range, reaching the range support and rising back to the resistance with single large candles. This shows increased volatility that was contained in the range. 

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Currently, the price trades above the 30-SMA, with the RSI above 50, supporting a bullish bias. Initially, bulls broke above the range resistance but failed to close above the level, making a large wick. If they succeed at breaking out, the price will likely breach the 1.4501 resistance level. Otherwise, it will fall back to the range support. 

A break below the range support would indicate a bearish breakout. However, to confirm a new downtrend, the price would have to start making lower highs and lows.

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• US job growth jumped in December, with the economy adding 256,000 jobs.

• The US unemployment rate eased to 4.1%.

• Canada’s economy added 90,900 jobs compared to forecasts of 24,900.

The USD/CAD forecast shows a slightly bullish bias as traders balance the upbeat employment reports from Canada and the US. The pair rose on Friday as US job growth beat estimates. However, a surge in Canada’s employment put a lid on further gains.

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Data on Friday revealed that US job growth jumped in December, with the economy adding 256,000 jobs. This number was much more significant than the forecast of 164,000. At the same time, the unemployment rate eased to 4.1%, compared to estimates of 4.2%.

The report indicated a resilient labor market, leading to a decline in Fed rate cut expectations. Given the robust economy, markets are gradually pricing out rate cuts this year. At the same time, Trump’s presidency might further boost demand. Consequently, the dollar soared against most of its peers. 

However, the Canadian dollar was an outlier since data from Canada also showed a resilient labor market. According to figures, the economy added 90,900 jobs compared to forecasts of 24,900. Meanwhile, the unemployment rate fell to 6.7%, missing estimates of 6.9%. The upbeat figures have eased pressure on the Bank of Canada to lower rates, boosting the loonie.

USD/CAD key events today

Market participants do not expect any high-impact reports today. Therefore, they will keep digesting Friday’s employment figures.

USD/CAD technical forecast: Bulls looking at 1.4450 resistance

On the technical side, the USD/CAD price is in a holding pattern between the 1.4300 support and the 1.4450 resistance level. The price trades above the 30-SMA within the range, showing bulls are in the lead. At the same time, the RSI trades above 50 in bullish territory. Therefore, there is a high chance USD/CAD will make another attempt at the range resistance. 

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Before the price started consolidating, it was in a bullish trend, trading above the 30-SMA. However, bulls failed to breach the 1.4450 resistance level, and momentum faded. As a result, the price formed a corrective move. 

If this allowed bulls to recover, USD/CAD will soon breach the range resistance to continue the uptrend. On the other hand, if bears become stronger, the trend might reverse to the downside. 

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• The greenback is heading for a sixth week of gains.

• Market participants fear a 25% tariff on Canadian goods.

• Traders are cautious ahead of employment figures from Canada and the US.

The USD/CAD price analysis indicates increased tariff uncertainty, which has given the dollar an edge over its peers, such as the Canadian dollar. At the same time, market participants remain cautious ahead of the pivotal US nonfarm payrolls report. The numbers will give clues on future Fed moves. 

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The greenback was heading for a sixth week of gains as US Treasury yields remained elevated due to Trump’s tariff proposals. Recent reports have shown that Trump remains aggressive about his tariffs. Therefore, market participants fear a 25% tariff on Canadian goods that could hurt the local economy.

Canada exports most of its goods to the US. An initial report that Trump would only focus on critical sectors had given the loonie some relief. However, when the president-elect denied such plans, the currency gave up its gains. 

Traders are also cautious about the upcoming employment figures from Canada and the US. According to economists, Canada’s economy might add 25,000 jobs in December, a slowdown from the previous month’s over 50,500 increase. Meanwhile, the unemployment rate might increase from 6.8% to 6.9%. 

On the other hand, job growth in the US might also slow, with the economy adding 160,000 jobs in December. However, unemployment will likely hold at 4.2%. These reports will guide the BoC and the Fed on future policy moves.

USD/CAD key events today

• Canada Employment Change
• Canada Unemployment Rate
• US Average Hourly Earnings m/m
• US Non-Farm Employment Change
• US Unemployment Rate

USD/CAD technical price analysis: Bulls gear up for a 1.4450 retest

On the technical side, the USD/CAD price trades above the 30-SMA with the RSI in bullish territory. However, the price has chopped through the SMA for a while, consolidating between the 1.4450 resistance and the 1.4300 support. 

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Previously, USD/CAD was trading in a bullish trend above the 30-SMA. Therefore, there is a chance the consolidation is a pause as bulls slowly regain momentum. If this happens, the price will soon break above the 1.4450 resistance to continue the uptrend. 

However, the price will likely remain in consolidation if the resistance holds firm. The trend will only reverse if bears gain enough momentum to break below the 1.4300 support and make a lower low.

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• Trump is considering emergency measures to facilitate a new tariff program. 

• An unexpected build in US crude inventories weighed on oil prices.

• US data showed a drop in private job growth.

The USD/CAD forecast shows renewed Trump tariff fears, which have weighed on the Canadian dollar. On the other hand, the US dollar has regained its shine due to a rally in Treasury yields. At the same time, market participants eagerly await employment figures from Canada and the US. 

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The Canadian dollar gave up its gains on Wednesday and Thursday as traders worried about looming tariffs on Canada’s exports. Reports showed that Trump was considering emergency measures to facilitate a new tariff program. This move came after previous reports that the new administration’s tariffs would only target critical sectors. However, Trump maintains his aggressive outlook. He proposed a 25% tariff on goods from Canada, which would hurt the local economy. 

Meanwhile, the loonie also fell due to a decline in oil prices. Notably, data on Wednesday revealed an unexpected build in US crude inventories, indicating weak demand last week. 

On the other hand, the tariff news boosted US Treasury yields, supporting the greenback. Additionally, traders digested reports showing a drop in private job growth and an unexpected decline in initial jobless claims. All focus has shifted to the upcoming monthly employment figures from Canada and the US.

USD/CAD key events today

Market participants do not expect any key releases from Canada or the US today. Therefore, the price might consolidate ahead of employment figures from both countries.

USD/CAD technical forecast: Bulls return to retest the 1.4400 resistance

On the technical side, the USD/CAD price has risen to retest the 30-SMA after making a new low near the. The previous bullish trend paused at the 1.4450 key resistance level and entered a period of consolidation. 

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Meanwhile, the RSI made a bearish divergence, showing bulls were losing enthusiasm. As a result, bears strengthened enough to trigger a sharp swing below the 30-SMA, which paused at the 1.4300 support level. 

The price has rebounded to retest the 30-SMA resistance and the 1.4400 key psychological level. If bears are ready to take charge, USD/CAD will soon bounce lower to revisit the 1.4300 support level. A break below this level would signal the start of a bearish trend. Moreover, it would allow the price to reach the 1.4201.

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