Trumps Tariffs on Canada: USD/CAD Remains Volatile
We are witnessing a surge in market volatility (as reflected by the upward trend of the ATR indicator), influenced by the following factors, according to Reuters:
Trumps Tariffs. On Tuesday, new 25% import duties on Mexico and Canada came into effect, while tariffs on Chinese goods were doubled to 20%.
Donald Trumps first speech in Congress since taking office. In it, the US president made significant statements, including the announcement of new tariffs.
The US Dollar Index initially rose during Trumps speech but later weakened to a three-month low. In theory, higher tariffs are positive for the US dollar. However, investors are looking beyond short-term safe-haven flows and are concerned about slowing US economic growth and the risk of stagflation.
Why Is Trump Imposing Tariffs?
Officially, US President Donald Trump is introducing tariffs on Canada to combat the "extraordinary threat" to US national security posed by uncontrolled drug trafficking.
However, according to Canadian Prime Minister Justin Trudeau, Trumps tariffs are aimed at weakening Canadas economyor even pushing it towards collapseso that the US could more easily annex Canadian territory.
Technical Analysis of USD/CAD
In our previous USD/CAD analysis, we highlighted key levels:
Resistance at 1.44600
Support at 1.43600
New chart data shows that bulls attempted to break through the 1.44600 resistance level, but the price failed to hold above the psychological barrier of 1.45000. Support at 1.43600 remains relevant for now.
Bulls may attempt another push upwards if the price retraces to the lower blue trendline. However, whether this scenario plays out will largely depend on the broader fundamentals related to Trumps tariffs on Canada, Mexico, and China.
Read more: https://fxopen.com/blog/en/oa-trumps-tariffs-on-canada-usdcad-remains-volatile/
Text source: Forex Trading Blog
