Canadian Dollar Short-term Outlook: USD/CAD Crashes on Trump Tariffs

Canadian Dollar Technical Outlook: USD/CAD Short-term Trade Levels

• USD/CAD marks largest single-day range since 2020 after President Trump delays tariffs on Canada
• Reversal off uptrend resistance threatens larger correction- key US / Canada employment data on tap
• Resistance 1.4383, 1.4496-1.4513 (key), 1.4690- Support 1.4268, 1.4178-1.42 (key), 1.4106

The US Dollar is poise to mark the largest single-week decline since December 2023 with USD/CAD off more than 1.43%. The decline masks a weekly range of nearly 3.3% as price reversed sharply off multi-decade highs on news that President Trump was going to delay Canadian tariffs. The event sparked a massive reversal with USD/CAD already poised to mark an outside-weekly reversal. Battle lines drawn on the USD/CAD short-term technical charts.

Canadian Dollar Price Chart – USD/CAD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView

Technical Outlook: In last month’s Canadian Dollar Short-term Outlook we noted that the USD/CAD may be vulnerable into uptrend resistance and that, “losses would need to be limited to 1.4260 IF price is heading higher on this stretch with a close above 1.4448 needed to fuel the next leg of the advance.” Price briefly registered an intraday low at 1.4289 the following week before reversing higher with the Trump tariff threat fueling a breakout yesterday that stretched as high as 1.4793.

News that President Trump had delayed a 20% tariff on Canada for thirty-days fueled a massive reversal yesterday and marked the largest single-day range in USD/CAD since March of 2020- that instance marked a multi-year high the following week before reversing more than 19%. A close back below uptrend resistance yesterday validates a false-breakout of the uptrend and threatens a deeper correction with the broader uptrend. The bulls are on the defensive early in the month.

Canadian Dollar Price Chart – USD/CAD 240min   

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/CAD on TradingView

Notes: A closer look at Canadian Dollar price action shows USD/CAD trading within a proposed descending pitchfork formation extending off the highs. Initial support rests with the 38.2% retracement of the September rally / January low at 1.4261/68 and is backed by the November high at 1.4178-1.42- note that the lower parallel converges on this threshold over the next few days and a break / close below would be needed to suggest a more significant high was registered this week / a larger reversal is underway. Subsequent support objectives rest at 1.4106 and the 2022 high / 2020 March weekly reversal close at 1.3978/90.

Yearly-open resistance is eyed at 1.4383 and is backed by the January high-day close (HDC) / 2020 HDC at 1.4496-1.4513- we’ll reserve this threshold as our near-term bearish invalidation level with a break / close above needed to alleviate further downside pressure. Ultimately a close above the 2016 high at 1.4690 is needed to mark uptrend resumption with the next major technical consideration seen near the 1.50-handle.  

Bottom line: USD/CAD responded to uptrend resistance with a spectacular reversal now threatening a deeper correction within the September uptrend. From a trading standpoint, rallies should be limited to 1.4513 IF price is heading lower on this stretch– look to reduce short-exposure / lower protective stops on a stretch towards the 1.42-handle IF reached.

Keep in mind we get the release U.S. Non-Farm Payrolls and Canada employment on Friday. Stay nimble into the releases and watch the weekly closes here for guidance. Review my latest Canadian Dollar Weekly Technical Forecast for a closer look at the longer-term USD/CAD trade levels.

Key USD/CAD Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex