The Canadian dollar is under growing pressure as the USD/CAD currency pair extends its upward momentum, driven by a confluence of economic factors. As of now, the pair is consolidating around the 1.4742 mark, following an extension of its upward structure. The recent imposition of a separate 10% tariff on Canadian energy exports by the United States has intensified the economic strain, particularly on Canada’s commodity-focused economy. Investors are keeping a close watch on upcoming Canadian GDP data, which could further influence the pair's trajectory.
A breakout from the current consolidation range to the upside would signal a move towards the 1.4808 level, a new target for market participants. Technical indicators, including the MACD, suggest further upside potential for USD/CAD, with its signal line positioned above zero and trending sharply upwards, confirming bullish momentum. However, the Stochastic oscillator hints at a potential short-term pullback, as its signal line hovers above 80 and appears ready to decline towards 20.
In the event of a downward breakout, the pair may experience a corrective move towards 1.4591 before making another attempt to reach the 1.4808 target. Market analysts predict that following this potential correction, another wave of growth could propel USD/CAD even higher to 1.4919. The central bank's announcement regarding its plans to resume asset purchases in March adds further pressure on the Canadian dollar, potentially impacting its performance in the currency markets.
The imposition of tariffs has immediate economic repercussions for Canada, particularly affecting its energy export sector. This development has led investors to closely monitor any possible trade retaliation measures from affected countries, which could further impact market dynamics. The forthcoming Canadian GDP data is also expected to play a crucial role in shaping the pair's future movements.
As USD/CAD continues to consolidate near current levels, market participants remain vigilant for any signs of a breakout or breakdown. The path towards 1.4808 is now open, making it the next local target following a successful breakout. Conversely, should the pair break downwards, a correction towards 1.4591 is on the cards before another wave of growth potentially targets 1.4919.