USD/CAD Eyes Breakout as Tariff Deadline Approaches

● The US Dollar’s recovery on tariff talk is causing the USD/CAD pair to bounce.
● The main events to watch out for this week are the US PCE data and Canadian GDP for Q4.
● A close above 1.43100 on the daily candle chart would signal a structural shift that could
empower bulls.

USD/CAD has enjoyed a bounce to start the week as the US Dollar eyes a recovery. The pair
has been caught in a tight range since February 14, but does appear to be consolidating ahead
of a potential breakout.

President Trump’s Tariff Pledge

US President Donald Trump announced yesterday that tariffs for Canada and Mexico would go
ahead on March 3. This message lent support to the US Dollar and allowed USD/CAD to record
another bullish day.

Given that approximately 75% of Canadian exports head to the US, tariffs and a potential tit-for-
tat trade war may prove detrimental to the Canadian economy.

Bank of Canada Awaits Tariff Confirmation

Bank of Canada Governor Macklem recently acknowledged that tariffs have added to
uncertainty.

Depending on how the tariff scenarios develop it could impact the decision by the Bank of
Canada (BoC) at its March 12, 2025, as pressure from consumers continue to mount.
Tariff developments may also prove to be a key driver for the pair this week as the deadline
approaches. Keep an eye out for any comments or more details from both US and Canadian
officials.

The Week Ahead – US & Canada

The economic calendar is full this week with a lot of US data and Federal Reserve policymakers
speak. Today we have housing starts data before we focus on comments from Federal Reserve
policymakers Barr and Logan.

The main data events affecting USDCAD will be released on Friday with Canadian GDP for Q4
before attention shifts to the much anticipated PCE data release from the US.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Technical Analysis and Outlook

USDCAD had been stuck in a range for nearly a month now as price continued its grand higher
yesterday.

Overall, on a daily timeframe the trend remains bearish which is supported by the 14-period
SMA which remains below the 50 level, a sign that bearish momentum remains in play.
A daily candle close above the 1.43100 will lead to a shift in structure and could embolden bulls.

USD/CAD Daily Chart, February 25, 2025

Source: TradingView (click to enlarge)

Dropping down to a H4 chart, and as you can see price bottomed out on February 14, printing a
series of higher highs and higher lows.

However my concern is with the two moving averages resting at 1.4285 and 1.4340 which could
cap any move to the upside.

USD/CAD Four-Hour Chart, February 25, 2025

Source: TradingView (click to enlarge)

Support
● 1.4172
● 1.4000
● 1.3956

Resistance
● 1.4310
● 1.4500
● 1.4594

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