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Canadian Dollar Forecast: USD/CAD Levels to Watch Ahead of Tariff Deadline, Election

Article By: ,  Head of Market Research
February 24, 2025 6:09 PM

EUR/USD Key Points

  • Trump’s tariff reprieve on Canada is set to expire next week on March 4, leaving USD/CAD traders uneasy.
  • The Canadian election is shaping up to be a potential coinflip between Pierre Poilievre and presumptive Liberal candidate Mark Carney
  • USD/CAD’s consolidation continues between 1.4100 and 1.4300 – read on for what to watch moving forward!

Much like the Canadian hockey team was able to salvage a late victory in the inaugural “4 Nations Face-Off” hockey tournament, Canada’s government was able to stave off the imposition of steep tariffs from the Trump Administration with a late accord to send additional troops to the border, ostensibly to deter the flow of fentanyl into the US.

Unlike the hockey triumph however, the tariff reprieve is set to expire next week on March 4, leaving USD/CAD traders uneasy. Given the Trump 2.0 Administration’s (albeit short) track record, there is reason for optimism that the imposition of tariffs could be staved off again with relatively token efforts, but traders are still far from confident that they’ve got a strong read on the former-real-estate-developer-turned-politician.

Beyond the US political-driven uncertainty around tariffs, there’s a heavy dose of domestic political-driven uncertainty for Canadians ahead of the election. When current Prime Minister Justin Trudeau announced his resignation in mid-January, it seemed a foregone conclusion that Conservative leader Pierre Poilievre would be the next PM and with a large majority. However, the liberal party (under presumptive leadership winner Mark Carney) has seen increasing support in the past few weeks, making the election essentially a coinflip at this point:

Source: Angus Reid

With political crosswinds aplenty to navigate in the coming weeks, it’s no surprise the USD/CAD bulls and bears have found to a standstill in recent days.

Canadian Dollar Technical Analysis – USD/CAD Daily Chart

Source: StoneX, TradingView

As the chart above shows, USD/CAD spiked to a 20+ year high near 1.4800 earlier this month before reversing back lower and falling below the January range low at 1.4300. The pair spent last week consolidating around 1.4200 and so far today’s price action has provided little in the way of impetus for a near-term breakout amidst the aforementioned uncertainty.

Moving forward, readers should monitor the key previous-support-turned-resistance level at 1.4300 … and the nearest previous-resistance-turned-support level at 1.4100 for a breakout and likely continuation. Conveniently, the ever-contracting range between the 50- and 100-day moving averages also coincide with those static support/resistance levels, providing a potential confirmation of a breakout in either direction.

-- Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX

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