Daily Price Outlook
During the European trading session on Tuesday, the USD/CAD currency pair continued to rise and reaching around 1.4340. The increase came after US President Donald Trump announced a sharp hike in tariffs on steel and aluminum imports to a flat 25% on Monday.
This move is meant to protect struggling US industries but has also raised concerns about a possible trade war, adding pressure to global markets.
Meanwhile, the US Dollar Index (DXY), which tracks the value of the US dollar against major currencies, extended its gains for the fourth consecutive session, reaching around 108.50. The stronger dollar is putting pressure on the Canadian dollar, making USD/CAD move higher.
Moreover, the US Federal Reserve (Fed) is now expected to keep interest rates steady throughout the year. This expectation follows the latest jobs report released on Friday, which showed slowing job growth but a lower unemployment rate.
Thus, the stable Fed policy is providing further support to the US dollar, keeping USD/CAD in an uptrend. Traders will watch for further developments in trade policies and economic data for the next move in the pair.
Canada Faces Pressure as US Imposes Higher Tariffs on Steel and Aluminum
On the CAD front, the currency weakened due to rising trade tensions after US President Donald Trump increased tariffs on steel and aluminum imports to a flat 25% on Monday. This decision removes all exemptions, including special deals and exclusions for certain products.
The new tariffs will take effect on March 12, and further restrictions on microchips and vehicles may follow. The move is meant to protect US industries but has raised concerns about a potential trade war, putting pressure on the Canadian Dollar.
Canada is the biggest supplier of aluminum to the US, providing nearly 80% of its imports in 2024. In 2023, steel imports made up about 23% of US steel consumption, with Canada, Brazil, and Mexico being the top suppliers.
The increased tariffs could negatively impact Canada’s exports, reducing demand for the CAD and pushing the USD/CAD pair higher. Traders are watching closely to see how Canada responds.
Canada’s Industry Minister, Francois-Philippe Champagne, criticized the tariffs as “totally unjustified.” He highlighted that Canadian steel and aluminum are essential for key US industries like defense, shipbuilding, energy, and automotive manufacturing.
He also stated that Canada is consulting with international partners and will respond in a “clear and calibrated” manner. (edited)
USD/CAD – Technical Analysis
USD/CAD is currently trading at $1.43342, marking a slight 0.01% gain, as the pair navigates a critical price zone. The currency pair remains under bullish pressure, reflecting strength in the U.S. dollar against the Canadian dollar, amid fluctuating commodity prices and macroeconomic data.
From a technical standpoint, USD/CAD is positioned above its pivot point at $1.42750, indicating the potential for further upside. If buyers maintain control, the pair could test immediate resistance at $1.43803. A breakout above this level could open the door toward $1.44394, with an extended rally targeting $1.45029, a level that has previously acted as a significant supply zone.
Conversely, key support levels are situated at $1.42193, followed by $1.41602. A drop below these levels could shift momentum in favor of sellers, with a potential move toward $1.40984, where buyers are likely to step in.
Moving averages suggest a mixed outlook. The 50-day EMA at $1.43988 remains above the current price, indicating short-term resistance. A sustained break above this level would reinforce bullish sentiment, while rejection at this zone could trigger a pullback.
Traders should monitor USD/CAD’s reaction near $1.43803. A strong close above this level could confirm further upside, while a failure to breach resistance may lead to consolidation or retracement toward lower support.
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