USD/CAD Clears 2020 High as Trump Tariff Looms
USD/CAD clears the 2020 high (1.4668) as US President Donald Trump imposes a 25% tariff on imports from Canada.
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US Dollar Outlook: USD/CAD
USD/CAD clears the 2020 high (1.4668) as US President Donald Trump imposes a 25% tariff on imports from Canada, with the six-day rally in the exchange rate pushing the Relative Strength Index (RSI) into overbought territory.
USD/CAD Clears 2020 High as Trump Tariff Looms
USD/CAD jumps to a fresh yearly high (1.4793) as the tariffs announced by the Trump Administration go into effect on February 4, and the move above 70 in the RSI is likely to be accompanied by a further advance in the exchange rate like the price action from last year.
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In turn, USD/CAD may continue to track the positive slope in the 50-Day SMA (1.4294) as it still holds above the moving average, and it remains to be seen if authorities in Canada will respond to the change in US trade policy as the Bank of Canada (BoC) acknowledges that ‘a protracted trade conflict would most likely lead to weaker GDP and higher prices in Canada.’
As a result, the BoC may continue to lower interest rates in 2025 in an effort to prevent a recession, and the Canadian Dollar may face headwinds ahead of the next meeting on March 12 as the Trump Administration warns that ‘should Canada retaliate against the United States in response to this action through import duties on United States exports to Canada or similar measures, the President may increase or expand in scope the duties imposed under this order to ensure the efficacy of this action.’
With that said, USD/CAD may extend the recent series of higher highs and lows as it pushes above the January range, but the RSI may show the bullish momentum abating should the oscillator struggle to hold above 70.
USD/CAD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/CAD Price on TradingView
- USD/CAD climbs to a fresh yearly high (1.4793) as it stages a six-day rally for the first time since November, with a close above 1.4790 (50% Fibonacci extension) bringing 1.4910 (61.8% Fibonacci extension) on the radar.
- Next area of interest comes in around 1.5090 (78.6% Fibonacci extension), but lack of momentum to hold above the 1.4600 (61.8% Fibonacci extension) to 1.4660 (38.2% Fibonacci extension) zone may push USD/CAD back towards the 1.4480 (100% Fibonacci extension) to 1.4510 (23.6% Fibonacci extension) region.
- Next area of interest comes in around 1.4299 (April 2020 high) and USD/CAD may give back the advance from the January low (1.4261) if it threatens the positive slope in the 50-Day SMA (1.4294).
Additional Market Outlooks
EUR/USD Pulls Back Ahead of December High
GBP/USD Holds Below 50-Day SMA Ahead of BoE Rate Decision
Gold Price Rallies to Fresh Record High amid Limited Response to Fed
AUD/USD Susceptible to Negative Slope in 50-Day SMA
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
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