- The USD/CAD price analysis shows increasing hopes of tariff negotiations.
- Canada was among the few countries that escaped reciprocal tariffs.
- The Eurozone and China are ready to impose counter-tariffs.
The USD/CAD price analysis shows a rebound in the Canadian dollar amid hopes of tariff negotiations that might lift global economic concerns. Meanwhile, the dollar remained fragile due to a recent drop in Treasury yields due to recession worries.
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Canada was among the few countries that escaped reciprocal tariffs on Wednesday. As a result, the Canadian dollar performed better than most other currencies. Moreover, market participants were expecting Trump to implement a 25% tariff on all imports from Canada. Such an outcome would have significantly hurt the loonie. As a result, there was relief when it did not come. Nevertheless, Canada still has to struggle with tariffs on steel, aluminum, and automobiles.
On the other hand, the dollar has fallen amid a drop in Treasury yields. The new tariffs announced last week have escalated trade tensions. The Eurozone and China are among the major economies that are ready to impose counter-tariffs. These tensions have sent traders scrambling for safer currencies like the yen. Meanwhile, US recession fears intensified, increasing Fed rate cut expectations and putting pressure on the dollar.
However, there was some relief on Tuesday amid reports that most countries are willing to negotiate better trading deals.
USD/CAD key events today
Market participants do not expect any high-impact economic releases from Canada or the US. As a result, the price might remain in a tight range.
USD/CAD technical price analysis: Bears pause at the 1.4150 support
On the technical side, the USD/CAD price has paused after meeting the 1.4150 support level. However, the bias is bearish since the price trades below the 30-SMA with the RSI below 50. Bulls have challenged the 30-SMA but failed to break above.
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The price recently met the 1.4050 support level before bouncing higher to retest the 30-SMA. Here, bulls punctured the resistance but failed to continue higher, making a wick. This allowed bears to return and push the price lower. However, the pause at the 1.4150 support has made a higher low. This is a sign that bulls might still attempt to take control.
A break above the SMA will confirm a bullish sentiment shift. On the other hand, if the SMA holds firm, the price will break below 1.4150 to retest the 1.4050 support level.
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