- The USD/CAD forecast shows caution ahead of more US tariffs.
- Data on Friday revealed weaker-than-expected consumer spending in Canada.
- Experts believe the dollar will recover with more tariffs.
The USD/CAD forecast shows caution as market participants await clarity on Trump’s next tariff moves. The Canadian dollar ended last week higher but remains vulnerable as traders prepare for a 25% tariff on Canadian goods starting in April. Meanwhile, experts believe the dollar might rebound with more tariffs, supporting Treasury yields.
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The loonie fell on Friday after data revealed weaker-than-expected consumer spending in Canada. Retail sales dropped by 0.6% compared to estimates of a 0.4% decline. The poor report increased expectations of more Bank of Canada rate cuts. At the same time, uncertainty about looming Trump tariffs weighed on the Canadian dollar last week. Trump suspended a 25% tariff on Canada until April. With the start date looming, the outlook for Canada’s economy is dimming.
However, there was some relief for Canada’s currency as Wall Street rebounded amid hopes of a softer tariff stance. Trump said he might be open to some flexibility on tariffs.
On the other hand, experts believe the dollar will recover with more tariffs. Last week, the greenback rebounded after the Fed meeting, which revealed caution among policymakers. More tariffs will likely support Treasury yields, allowing the dollar to recover.
USD/CAD key events today
- Flash Manufacturing PMI
- Flash Services PMI
USD/CAD technical forecast: Price pauses near the 30-SMA support
On the technical side, the USD/CAD price is facing the 30-SMA line after finding resistance at the 1.4400 resistance level. However, bulls are still in the lead because the price trades slightly above the SMA.
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On a larger scale, the price is trading in a range between the 1.4275 support and the 1.4525 resistance levels. Moreover, the range has a strong midpoint at the 1.4400 key level. USD/CAD recently retested the range support, which held firm. After this, the price broke above the SMA but paused at the range midpoint.
If the price breaks below the SMA, bears will make another attempt at the range support. A breakout will signal the start of a bearish trend. On the other hand, bulls might return to push the price off the 30-SMA and above the 1.4400 resistance. This would allow a retest of the range resistance.
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