The USDCAD found a bottom on Monday, just above Friday’s low and key psychological support at 1.4000. The low reached 1.4003, attracting buyers who pushed the pair back above the falling 100-hour moving average. The rally extended into Tuesday, initially stalling ahead of the 200-hour moving average before buyers gained enough momentum later in the day to break above it. That move carried the pair toward the July 10 swing low at 1.4116, where the advance began to lose steam.
From there, the pair has been on a bit of a roller coaster. A corrective pullback brought the price back toward the 100- and 200-hour moving averages, but buyers stepped in and defended those levels on Thursday. Today, the pair briefly slipped below the 100-hour moving average, but the rising support from the 200-hour moving average helped spark another bounce. That rebound pushed the price to a new high for the week at 1.4114, just two pips shy of the 1.4116 target, before sellers resurfaced. The pair has since rotated lower and is currently trading near 1.4087.
So what’s next?
Since Tuesday, the technical story has been fairly straightforward: despite the back-and-forth price action, buyers have consistently defended the 100- and 200-hour moving averages. The more important of the two is the 200-hour moving average, now near 1.4061. As long as the price remains above that level, buyers retain the technical advantage from both a short- and medium-term perspective.
What buyers do not want to see is a decisive move back below those moving averages. If that occurs, recent buyers are likely to become sellers, shifting the focus back toward the 1.4000/03 lows from Friday and Monday, and potentially the 38.2% retracement of the rally from the May low to the June high at 1.3981.
On the topside, the key hurdle remains the 1.4116 to 1.4148 resistance zone—the former support floor that held from mid-June through mid-July. A sustained break above that area would represent another technical victory for buyers and should open the door for additional upside momentum. Until then, the battle around the hourly moving averages remains the key barometer for near-term direction.
Fundamentally, the U.S. dominated trade headlines this week after the Trump administration implemented a new tariff framework, imposing 10% or 12.5% duties on imports from dozens of countries. Canada received the lower 10% rate, but existing tariffs on products such as steel, aluminum, and copper remain in place. Markets are now focused on how the new trade policy could affect inflation, negotiations with trading partners, and the Federal Reserve’s policy outlook.
Canada spent the week responding to the latest U.S. tariff changes while continuing to emphasize negotiations over retaliation. The opening of the Gordie Howe International Bridge highlighted the importance of North American trade, but the event was overshadowed by renewed tariff tensions. Canadian officials also continued to stress diversifying trade beyond the U.S. while maintaining integrated supply chains.
The new tariff framework supported the U.S. dollar on expectations that higher import costs could keep inflation elevated and delay Fed rate cuts.
Bottom Line
Trade policy—not trade deals—was the dominant theme this week. While Canada avoided the higher tariff tier, ongoing sector-specific duties and the new U.S. tariff framework mean uncertainty remains elevated for businesses, policymakers, and financial markets on both sides of the border.
This article was written by Greg Michalowski at investinglive.com.