USD/CAD holds near C$1.3925 resistance as US dollar rebounds after Treasury market volatility

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US Dollar vs Canadian Dollar up 0.51%

Highlights

The US enacted 50% tariffs on Canadian goods, raising costs for Canadian exporters and straining key sectors.
The Canadian dollar declined as investors reconsider trade and growth prospects, while the US dollar strengthened on renewed demand.
USD/CAD trades with bullish momentum and overbought signals, with a projected range of C$1.3787 to C$1.3925 in the next 2 to 3 days.

Tariff-driven loonie weakness amid cross-border trade concerns

The US has implemented new 50% tariffs on Canadian goods, a confirmed action that immediately increases costs for Canadian exporters and pressures several key sectors, as reported by Feedstuffs. This move has led to a notable weakening of the Canadian dollar, as investors weigh the negative implications for cross-border trade and growth prospects. Additional support for the US dollar comes from its rebound following earlier volatility in the Treasury markets, reinforcing the US currency's position amid ongoing trade tension.

Overbought momentum as price exceeds key technical markers

On the technical front, USD/CAD closed at C$1.3856, above the MA-20 and MA-50 on the hourly chart, as well as the MA-200 daily. The Ichimoku Kijun at C$1.3804 represents the immediate support level. Momentum indicators provide a mixed picture: MACD and ADX signal a buy, the RSI reads 71 and warns of overbought conditions, while Stochastic RSI is neutral and CCI suggests continued buying strength. Bull/Bear Power also supports buyers intraday, while the Awesome Oscillator remains neutral.

Sideways bias with upside risk if resistance breaks

Over the next 2 to 3 trading days, USD/CAD is expected to fluctuate within a typical volatility band from C$1.3787 to C$1.3925. The most likely scenario is for the pair to hold in a sideways corridor, with a high probability for further upside if resistance near C$1.3925 is breached. If the rate falls below immediate support at C$1.3804, a move toward the lower boundary of the forecast range is possible, but such a downside scenario currently carries low probability.

Viktoras Karapetjanc, analyst at Traders Union, sees strong macro and sentiment tailwinds for USD/CAD after the confirmed US tariff action. He believes the Canadian dollar remains under pressure as trade tensions bite and investors shift toward the US dollar. Technical structure indicates buyers are in control, with momentum supportive despite overbought signals. The near-term outlook favors further upside if resistance at C$1.3925 is breached. "With policy actions and market flows aligned, I expect USD/CAD to keep its bullish bias as long as key support holds."

Earlier, analysts noted that persistent downward momentum and unresolved trade tensions continued to complicate the outlook for USD/CAD. The current developments both reinforce these concerns and introduce new upside risk, making C$1.3925 a critical resistance level to monitor for potential breakout opportunities in the near term.

Source of Data: USD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

The information is based on forecasts and does not constitute investment advice or a guarantee of future results. Market conditions may change. See our Disclaimer and Editorial Integrity for details.