USD/CAD Price Analysis – March 25, 2025

Daily Price Outlook

During the European trading session, the USD/CAD currency pair is currently trading around 1.4320, recovering after losses in the previous session.

The pair, which is usually sensitive to market risk sentiment, is gaining strength as traders remain cautious ahead of US President Donald Trump’s upcoming tariff announcement on April 2.

The uncertainty surrounding the potential for new tariffs is affecting investor sentiment, but the Canadian Dollar (CAD) is finding some support due to mixed signals from Trump’s comments. This balance of caution and uncertainty is keeping the pair in focus for traders.

Risk Aversion and Tariff Expectations Impacting USD/CAD

On the CAD front, the Canadian dollar has been buoyed by comments from Trump, who hinted that "a lot" of countries could receive exemptions from the tariffs, though details remain uncertain.

This sparked some optimism among investors, who welcomed the possibility that the US may adopt a more targeted, measured approach to tariffs. This easing of concerns over potential disruptions to Canadian businesses has provided support for the CAD, allowing it to recover against the USD.

Despite this, the US dollar faced pressure due to rising fears of an economic slowdown, fueled in part by concerns surrounding Trump’s trade policies. The uncertainty surrounding the tariff announcement has led to a risk-off sentiment in the markets, with investors seeking safer assets.

However, the pressure on the USD has been somewhat offset by hawkish comments from Federal Reserve Chairman Jerome Powell last week. Powell emphasized the solid labor market and inflation moving closer to the Fed’s 2% target, which helped to support the Greenback.

US Economic Data Provides Mixed Signals

On the economic front, the latest data paints a mixed picture for the US economy. The S&P Global US Composite PMI for March rose to 53.5, marking a strong recovery from February’s 10-month low of 51.6 and signaling the strongest expansion since December 2024.

This growth was largely driven by a sharp rebound in business activity in the services sector. The S&P Global US Services PMI surged to a three-month high of 54.3, surpassing expectations and showing a marked improvement from February’s reading of 51.0.

On the other hand, the Manufacturing PMI showed signs of weakness, slipping to 49.8 from 52.7 and falling short of expectations. This decline followed February’s strong manufacturing growth, indicating that while the services sector remains robust, the manufacturing sector is facing headwinds.

Therefore, the mixed US economic data, with strong services growth but weak manufacturing, could create volatility in the USD/CAD pair, as traders weigh the overall strength of the US economy.

USD/CAD – Technical Analysis

USD/CAD is trading marginally lower at $1.43282, just above its pivot point at $1.43084, maintaining a cautiously bullish tone in early trading.

The 4-hour chart shows the pair consolidating above a key support level, with the 50-period EMA positioned at $1.43445. Price action remains tightly compressed between this EMA and immediate resistance at $1.43596, signaling indecision but with an upward lean.

A break above $1.43596 would indicate renewed bullish momentum, potentially lifting the pair toward the next resistance levels at $1.44013 and $1.44518. These zones represent areas of recent selling interest and will be critical in determining the sustainability of any breakout.

On the downside, if the pair dips below the pivot at $1.43084, immediate support lies at $1.42661. A further breakdown may expose deeper levels at $1.42125 and $1.41602, with the latter serving as a major trendline support zone.

As long as the pair stays above the pivot and reclaims the 50-EMA, short-term bias remains upward. However, any failure to hold above $1.43084 could shift control back to sellers.

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