USD/CAD Remains Vulnerable to Trump Trade Policy Ahead of Fed Meeting
US Dollar Outlook: USD/CAD
USD/CAD gives back the advance from earlier this week even as US President Donald Trump warns of the ‘tremendous deficit with Canada,’ and the exchange rate may trade below the 50-Day SMA (1.4239) for the first time since October should it fail to defend the monthly low (1.4261).
USD/CAD Remains Vulnerable to Trump Trade Policy Ahead of Fed Meeting
Keep in mind, USD/CAD spiked to a fresh monthly high (1.4517) earlier this week as the Trump administration considers a 25% tariff for Canada, but the exchange rate may consolidate over the remainder of the month should it no longer track the positive slope in the moving average.
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, USD/CAD may struggle to retain the advance from the December low (1.3991) ahead of the Federal Reserve interest rate decision on January 29, and it remains to be seen if the change in fiscal policy will sway the central bank as President Trump insists that ‘we just want to be treated fairly with other nations’ while speaking to the World Economic Forum in Davos, Switzerland.
US Economic Calendar
Even though the Federal Open Market Committee (FOMC) is expected to keep US interest rates on hold at its first meeting for 2025, Fed officials may offer a dovish forward guidance as the ‘median participant projects that the appropriate level of the federal funds rate will be 3.9 percent’ at the end of this year.
In turn, more of the same from the FOMC may produce headwinds for the Greenback as the central bank pursues a neutral policy, but Chairman Jerome Powell and Co. may show a greater willingness to further combat inflation as the US economy shows little signs of a recession.
With that said, USD/CAD may continue to hold above the 50-Day SMA (1.4239) should the Fed adopt a less-dovish forward guidance, but the exchange rate may no longer track the positive slope in the moving average if it fails to defend the monthly low (1.4261).
USD/CAD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; USD/CAD Price on TradingView
- USD/CAD may consolidate over the coming days as it halts a three-day advance, but a move below the 1.4280 (38.2% Fibonacci extension) to 1.4299 (April 2020 high) zone may lead to a test of the monthly low (1.4261).
- Lack of momentum to hold above the 50-Day SMA (1.4239) may push USD/CAD towards the 1.4170 (23.6% Fibonacci extension) to 1.4210 (78.6% Fibonacci extension) region, but the exchange rate may continue to track the positive slope in the moving average should it hold above the monthly low (1.4261).
- Need a move back above the 1.4460 (61.8% Fibonacci extension) to 1.4480 (100% Fibonacci extension) area to bring the monthly high (1.4517) on the radar, with the next region of interest coming in around 1.4590 (78.6% Fibonacci extension).
Additional Market Outlooks
Gold Price Rally Fizzles to Keep RSI Below Overbought Zone
AUD/USD Recovery Stalls Ahead of Monthly High
EUR/USD Pushes Above 50-Day SMA for First Time Since October
USD/JPY Slips to Fresh Monthly Low Ahead of BoJ Rate Decision
--- 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