USD/CAD Rose Amid Tariff Woes

Fundamental Analysis

* Levy Loom: The Canadian Dollar weakened against the U.S. Dollar as traders continued to evaluate President Trump’s policies and tariff concerns. Late Tuesday, U.S. President Donald Trump announced plans to implement 25% tariffs on Canada and Mexico, along with duties on China and the European Union, starting February 1. These remarks pressured the Canadian Dollar (CAD) lower, given Canada’s heavy reliance on trade with the U.S., where approximately 75% of its exports are directed. Additionally, cooling inflation in Canada last month has increased the likelihood of a rate cut by the Bank of Canada (BoC) in January, further weighing on the Loonie. Statistics Canada reported on Tuesday that the country’s CPI inflation declined to 1.8% year-over-year in December, down from 1.9% in November, slightly below market expectations of 1.9%.

Technical Analysis

*Technical Breakout: USDCAD was traded higher following prior rebound from the support level 1.43250. MACD which illustrate bullish momentum signal suggest the pair to likely extend its gains.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 1.44650. Conversely, a potential reversal is also to be expected and the price could head back towards 1.43250.

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Potential Risks

Looking ahead, market attention is likely to continue to center on Donald Trump’s policy updates, as traders assess their potential impact on the global economy. On the economic front, the calendar is relatively light, but key U.S. data such as S&P Global PMI figures will still draw focus.

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Monitoring

Stay updated on US and Canada data, Trump updates, global market updates, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.