The USD/CAD currency pair has experienced a significant surge, building on Friday's momentum as it breaks through the 1.4500 psychological level. As trading commenced this week, strong follow-through buyers pushed the pair towards the 1.4700 mark, with resistance expected in the vicinity of 1.4750 and further at 1.4800. This movement positions the pair near a multi-decade high, last seen during the Asian session. The recent developments are heavily influenced by US President Donald Trump's imposition of new tariffs, which have bolstered the US Dollar (USD) to near a two-year peak.
The USD/CAD's upward trajectory reflects a well-established trend since it rebounded from a September 2024 swing low. The currency pair continues to attract attention as traders navigate a landscape shaped by trade policies and economic indicators. The Canadian labor market statistics and fluctuations in oil prices are poised to play pivotal roles in determining future directions for the USD/CAD.
Notably, the USD/CAD pair is trading in an overbought zone according to the Relative Strength Index (RSI) on the daily chart. This technical indicator suggests potential for profit-taking, which may explain the intraday pullback of approximately 100 pips. Despite this, concerns over the economic impact of President Trump's tariffs provide underlying support for the pair, reinforcing its resilience and upward momentum.
The USD/CAD has reached levels not seen since April 2003, trading near the 1.4800 range. Market participants have identified robust support around the 1.4600 round figure, with additional backing near the 1.4500 psychological level. This solid foundation underpins the pair's bullish trend, with analysts forecasting a near-term constructive outlook favoring USD bulls.
In addition to trade tensions, the currency pair remains sensitive to key economic data releases. The US Nonfarm Payrolls (NFP) report, slated for Friday, is anticipated to exert significant influence on market sentiment and movements of the USD/CAD pair. Similarly, Canadian employment data, set to be released alongside oil price dynamics, is expected to shape market forecasts and trading strategies.
The interplay between these factors—trade tariffs, employment reports, and oil price fluctuations—adds complexity to the USD/CAD's trajectory. Traders are closely monitoring these variables as they weigh potential impacts on currency valuations and market dynamics.