Canadian dollar price climbs to 2025 high as USD/CAD slides below $1.38 amid tariff fallout
Canadian dollar hits fresh 2025 high as U.S.-China tariff war rattles markets
The Canadian dollar surged to its highest level in over five months on Friday, pushing USD/CAD below the critical $1.38 mark amid heightened trade tensions and broad U.S. dollar weakness. At the time of writing, the pair was trading near $1.3845—levels not seen since November 2024—marking a near 0.9% decline on the day.
The move was largely fueled by a sharp market reaction to fresh tariff announcements from both Washington and Beijing. The U.S. confirmed it would raise tariffs on Chinese goods to 145%, exceeding previous expectations of 125%, while China retaliated by hiking its own levies on U.S. imports to 125% from 84%, effective April 12. The escalation has stoked fears of a global economic slowdown and intensified recession concerns in the U.S., prompting investors to flee the greenback.
USD/CAD price movement (February 2025 - April 2025) Source: TradingView.
Canada avoids tariff blow, gains trade-driven momentum
In contrast to China and other major economies, Canada has benefitted from a more favorable trade position. A 90-day pause in additional U.S. tariffs—with most Canadian goods still subject to just a 10% baseline rate—has helped shield the Canadian economy from the worst of the trade fallout. The result has been a reassessment of Canadian export resilience and a shift in capital back into Canadian assets.
Investor attention now turns to the upcoming March Consumer Price Index (CPI) release and next week’s Bank of Canada (BoC) monetary policy meeting. Markets are closely watching whether the BoC will acknowledge the external trade climate in its policy language, especially after the U.S. imposed additional duties on Canadian steel and aluminum earlier this month.
U.S. data and rate outlook in focus
Later today, the U.S. Producer Price Index and University of Michigan’s Consumer Sentiment Index are due, with markets watching closely for further signs of economic deterioration. The Federal Reserve is still expected to deliver multiple rate cuts this year, a narrative that continues to undermine the U.S. dollar’s broader appeal.
We noted USD/CAD’s vulnerability below the 100-day SMA and identified 1.4 as a key support. With the current price below $1.385, the 200-day SMA near $1.38 becomes critical. A break could open room for further downside toward 1.3670 if Canadian macro data outperforms.
