Canadian Dollar Forecast: USD/CAD Coils Ahead of Trump Tariffs
Canadian Dollar Outlook: USD/CAD
USD/CAD trades near the monthly low (1.4151) despite the looming Trump tariffs for Canada, and the exchange rate may continue to give back the advance from the December low (1.3991) should it snap the range bound price action from earlier this week.
Canadian Dollar Forecast: USD/CAD Coils Ahead of Trump Tariffs
USD/CAD continues to hold below the 50-Day SMA (1.4342) as it gives back the advance from the start of the week, with the moving average no longer reflecting a positive slope amid the recent depreciation in the exchange rate.
In turn, the weakness in USD/CAD may persist as the Relative Strength Index (RSI) sits at its lowest level since September, but ongoing change in US trade policy may sway the exchange rate as the Bank of Canada (BoC) acknowledges that ‘a protracted trade conflict would lead to a decline in economic activity.’
Join David Song for the Weekly Fundamental Market Outlook webinar.
David provides a market overview and takes questions in real-time. Register Here
The summary from the January meeting suggest the BoC will pursue a proactive approach fulfilling its dual mandate as ‘monetary policy is better positioned to help smooth the economy’s adjustment to a tariff shock,’ and the central bank may alter its forward guidance over the coming months as ‘members agreed that it would be important to provide Canadians with their updated analysis and assessments of the impact of a trade conflict on the economy and inflation as it unfolds.’
As a result, the Canadian Dollar may face headwinds ahead of the next BoC meeting on March 12 as the threat of a trade war puts pressure on Governor Tiff Macklem and Co. to implement lower interest rates, but future announcements by President Donald Trump may sway USD/CAD should Canada and the US strike a deal before the end of the month.
With that said, the range bound price action in USD/CAD may turn out to be temporary as the one-month delay for the Trump tariffs comes to an end, but lack of momentum to hold above the monthly low (1.4151) may push the exchange rate towards the December low (1.3991).
USD/CAD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/CAD Price on TradingView
- USD/CAD appears to be defending the monthly low (1.4151) as it trades within a narrow range, with a move/close above the 1.4210 (78.6% Fibonacci extension) to 1.4270 (38.2% Fibonacci retracement) zone opening up the 1.4470 (23.6% Fibonacci retracement) to 1.4510 (23.6% Fibonacci extension) region.
- Next area of interest comes in around 1.4600 (61.8% Fibonacci extension) to 1.4660 (38.2% Fibonacci extension), but failure to defend the monthly low (1.4151) may push USD/CAD towards 1.4110 (50% Fibonacci extension).
- Next region of interest comes in around 1.3940 (61.8% Fibonacci retracement) to 1.4000 (62.8% Fibonacci extension), which incorporates the December low (1.3991), with a breach below 1.3850 (50% Fibonacci extension) bringing the November low (1.3821) on the radar.
Additional Market Outlooks
Gold Price Rallies to Fresh Record High to Push RSI Back Above 70
GBP/USD Eyes December High amid Ascending Channel Formation
AUD/USD Clears January High to Trade in Ascending Channel
US Dollar Forecast: EUR/USD Rally Stalls Ahead of January High
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.
FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.
FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.
This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.
Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.
StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.
© FOREX.COM 2025