USD/CAD holds near $1.43 as trade tensions and oil prices offer mixed signals

The USD/CAD pair hovered near the 1.43 mark on Monday, trading flat as investors digested mixed fundamental cues. The pair struggled to build momentum after bouncing from a monthly low, with traders cautious ahead of key macro events later this week, including President Trump’s upcoming reciprocal tariff announcement on April 3.
The U.S. Dollar remained under pressure, weighed down by market bets that the Federal Reserve could resume rate cuts amid growing concerns of a tariff-induced slowdown. Despite Friday’s data showing core U.S. PCE inflation rose by 0.4% in February—marking the highest monthly increase since January 2024—the market appears more focused on downside risks to growth. University of Michigan data also showed a jump in one-year inflation expectations to a 2.5-year high.
Adding to the risk-off tone, reports emerged that U.S. President Donald Trump could expand tariffs to a broader range of countries. The initial 25% levy on non-American cars and trucks is set to begin on April 2, and markets fear retaliatory measures could deepen global economic uncertainty.
USD/CAD price dynamics (February 2025 - March 2025) Source: TradingView.
Loonie weighed down by weak GDP signals and falling crude
On the Canadian side, the loonie has failed to capitalize on USD weakness due to subdued crude oil prices and disappointing domestic data. Hopes of a Ukraine peace deal have capped oil’s upside, keeping prices below recent highs and limiting support for the commodity-linked CAD.
Meanwhile, Canada’s GDP for February is expected to show stagnant growth, raising speculation that the Bank of Canada may lean toward a more dovish stance. With approximately 75% of Canadian exports heading to the U.S., any escalation in trade conflict could significantly impact sectors like autos, lumber, and raw materials—posing downside risks to the Canadian dollar.
In earlier coverage, we highlighted how the CAD’s direction hinges on the interplay between U.S. trade policy, BoC monetary signals, and oil prices. The pair’s current rangebound behavior above 1.43 reinforces that narrative, as conflicting macro forces continue to keep both bulls and bears in check.