Canadian Dollar Forecast: USD/CAD Breakout Looms on Trump Tariffs
USD/CAD may face increased volatility with the US on track to deploy reciprocal tariffs on April 2.
Share this:
Canadian Dollar Outlook: USD/CAD
USD/CAD still trades within the opening range for March as it bounces back ahead of the monthly low (1.4239), but the exchange rate may face increased volatility with the US on track to deploy reciprocal tariffs on April 2.
Canadian Dollar Forecast: USD/CAD Breakout Looms on Trump Tariffs
USD/CAD attempts to retrace the decline from the weekly high (1.4402) as Canada’s Retail Sales report shows a 0.6% decline in January versus forecasts for 0.4% contraction, and signs of a slowing economy may push the Bank of Canada (BoC) to further reduce interest rates as ‘the pervasive uncertainty created by continuously changing US tariff threats is restraining consumers’ spending intentions and businesses’ plans to hire and invest.’
Join David Song for the Weekly Fundamental Market Outlook webinar.
David provides a market overview and takes questions in real-time. Register Here
In turn, the Canadian Dollar may face headwinds ahead of the next BoC meeting on April 16 as the central bank acknowledges that ‘monetary policy cannot offset the impacts of a trade war,’ but it seems as though the Governing Council is in no rush to implement additional rate-cuts as Governor Tiff Macklem warns that ‘there can be no doubt about our commitment to low inflation.’
Until then, the ongoing transition in US trade policy may continue to sway USD/CAD as it clouds the outlook for the global economy, but the exchange rate may track the flattening slope in the 50-Day SMA (1.4344) should it continue to trade within the opening range for March.
With that said, USD/CAD may consolidate over the remainder of the month as it holds within the opening range for March, but failure to defend the price range may lead to a test of the February low (1.4151).
USD/CAD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/CAD Price on TradingView
- USD/CAD may continue to trade within a defined range as it rebounds ahead of the monthly low (1.4239), and lack of momentum to break/close below the 1.4210 (78.6% Fibonacci extension) to 1.4270 (38.2% Fibonacci retracement) zone may push the exchange rate back towards the 1.4470 (23.6% Fibonacci retracement) to 1.4510 (23.6% Fibonacci extension) region.
- Nevertheless, the range bound price action may turn out to be temporary, with a close above the 1.4470 (23.6% Fibonacci retracement) to 1.4510 (23.6% Fibonacci extension) region bringing the 1.4600 (61.8% Fibonacci extension) to 1.4660 (38.2% Fibonacci extension) area on the radar.
- At the same time, a break/close below the 1.4210 (78.6% Fibonacci extension) to 1.4270 (38.2% Fibonacci retracement) zone may lead to test of the February low (1.4151), with the next area of interest coming in around 1.4110 (50% Fibonacci retracement).
Additional Market Outlooks
EUR/USD Post-Fed Weakness Pulls RSI Back from Overbought Zone
Gold Price Rally Pushes RSI Back into Overbought Territory
AUD/USD Fails to Test February High Ahead of Fed Rate Decision
British Pound Forecast: GBP/USD Vulnerable to Dovish Bank of England (BoE)
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
Related tags:
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USDCAD Forecast Fed expectations keep pressure on the Canadian dollar
Despite the Canadian dollar’s recovery attempts in previous weeks, a renewed loss of strength against the U.S. dollar is becoming evident. This is reflected in USD/CAD, which has gained more than 0.2% over the last 2 trading sessions, including the close of last week and the first session of this week.
USDCAD Forecast Canadian dollar weakens as tariff fears return
The week continues to move in favor of the US dollar against its main rivals, and this is also reflected in USD/CAD price action. Over the last three trading sessions, the pair has gained more than 0.6%, showing that the Canadian dollar continues to lose ground in a meaningful way.
Bitcoin Price Outlook: Dip Buying Near $60K in Focus
Bitcoin dip-buying interest remains in focus as the cryptocurrency tests critical lows and momentum levels. Risk-off sentiment across the market remains broadly correlated, keeping key crypto regulatory developments in sight to confirm a possible structural turn.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.