The USDCAD currency pair has seen a significant decline, dropping more than 3% following its retreat from a nearly 22-year high of 1.4792. This pullback has brought the pair down to the 38.2% Fibonacci retracement level of the upward move from 1.3440 to 1.4792, landing at 1.4270. As market participants digest these movements, the pair opened with an upside gap and is attempting to regain lost territory, holding within the confines of the short-term simple moving averages (SMAs).
Technical indicators, including the Relative Strength Index (RSI) and stochastic oscillators, suggest potential for an upward move in the USDCAD. The bullish scenario is further supported by momentum oscillators, with a move above the 200-day SMA possibly confirming this trend and propelling the pair toward 153.65. Conversely, a decline beneath the downtrend line could lead the pair to challenge the 1.2250 support and plunge toward a 15-month low at 1.2100.
The current market dynamics are influenced by several factors, including President Donald Trump's announcement of a 25% tariff on all steel and aluminum imports, effective Monday. This decision has bolstered the US Dollar amid repeated tariff threats, creating a complex trading environment. Additionally, Trump has pledged to unveil further import tariffs later this week, adding another layer of uncertainty.
While USDCAD navigates its fluctuations, other currency pairs and financial instruments are also experiencing notable movements. The EUR/USD remains stable above 1.0300 as of Monday, while USDJPY has encountered a strong negative trend over the past fortnight, driving it to a fresh two-month low of 150.90.
In the cryptocurrency market, Litecoin (LTC) has witnessed a substantial increase, surging over 8% to trade around $116.00 at the time of writing. This positive movement reflects broader market shifts and investor sentiment.
Meanwhile, in an attempt to address economic concerns, the Bank of England recently reduced its benchmark lending rate by 25 basis points. The central bank is exercising caution with future rate cuts due to worries about wage growth and inflation resulting from the Labour government's budgetary policies.