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IPC Index — Mexico MarketUSD/CAD Holds above 1.4300, 100-day SMA pivotal support ahead of Trump’s tariffs
- USD/CAD recovers a few pips after touching a fresh weekly low during the Asian session.
- A combination of factors cap the upside ahead of Trump’s reciprocal tariffs announcement.
- The technical setup also warrants some caution before placing aggressive directional bets.
The USD/CAD pair reverses an Asian session dip to sub-1.4300 levels or a fresh weekly low touched during the Asian session on Wednesday, and for now, seems to have stalled the overnight pullback from the 1.4415 area, or a nearly three-week high. Spot prices, however, lack follow-through buying as traders opt to wait on the sidelines ahead of US President Donald Trump’s tariffs announcement later today.
In the meantime, worries about the potential economic fallout from US tariffs, amid reports that the Trump administration is considering imposing global tariffs of up to 20% on almost all US trading partners, undermine the Canadian Dollar (CAD). That said, the recent move up in Crude Oil prices offers some support to the commodity-linked Loonie. Furthermore, bets that the Federal Reserve (Fed) will resume its rate-cutting cycle soon keep the US Dollar (USD) bulls on the defensive and cap the upside for the USD/CAD pair.
From a technical perspective, spot prices showed some resilience and bounced off the 100-day Simple Moving Average (SMA) support. This, along with neutral oscillators on the daily chart, makes it prudent to wait for a sustained break and acceptance below the 1.4300 mark before placing bearish bets around the USD/CAD pair. The subsequent slide has the potential to drag spot prices towards last week’s swing low, around the 1.4235 region, which if broken decisively will be seen as a fresh trigger for bearish traders.
The USD/CAD pair might then turn vulnerable to prolong its downtrend below the 1.4200 mark, towards testing the year-to-date low, around the 1.4150 region touched on February 14.
On the flip side, any further move up is likely to confront some resistance near the 1.4350 area, above which a bout of a short-covering move should allow spot prices to reclaim the 1.4400 round figure. Some follow-through buying should pave the way for additional gains and lift the USD/CAD pair towards the 1.4440 intermediate hurdle en route to the 1.4480 region, the 1.4500 psychological mark, and the monthly swing high, around the 1.4545 region.
USD/CAD daily chart
