Tariff News Fails to Hold USDCAD Breakout

The USDCAD shot up on Friday after a surprise announcement: the U.S. will impose a 35% tariff on Canadian imports starting August 1. The decision, tied to trade deficits and fentanyl concerns, initially sparked buying interest in the USD.

But the excitement didn’t last. After jumping above 1.3710 a
nd briefly breaching the 38.2% retracement level of 1.3720, buyers lost steam. The move quickly reversed, showing that the market wasn’t ready to commit.

Resistance Holds at 1.3710

Price returned to 1.3710 later yesterday during the U.S. session, because of a stronger than expected jobs report, but once again failed to break through. Traders stepped in to sell, treating the level as a firm ceiling.

This area between 1.3710 and 1.3720 is now a clear resistance zone. Without a solid push above this level, buyers may stay cautious.

Support Builds Near 1.3650

On the downside, the pair continues to find support around 1.3649 – 1.3651. This zone was held three times last week, forming a solid base. The 200-hour moving average is now moving toward that area, adding weight to it as a support level.

If this support breaks, it could trigger a deeper drop. But as long as it holds, the pair remains in a sideways range.

Moving Averages Define the Battle Zone

The 100-hour moving average has become a pivot point. Price has been bouncing above and below it since midweek, reflecting the indecision in the market.

Traders should watch how price behaves around the 100-hour and 200-hour moving averages. These levels are guiding short term sentiment and could offer clues about the next move.

What This Means for Traders

USDCAD is stuck between strong support and resistance. The initial tariff driven rally failed, which means traders are cautious. Many may be waiting for more clarity either a break above 1.3720 or a fall below 1.3649 before committing to a direction.

Here’s how to trade it:

• Watch for a clear break above 1.3720 to signal bullish momentum.
• A break below 1.3649 could shift momentum back to the downside.
• Until then, range trading strategies with tight stops may work best.

Don't Miss the Next Move

Markets are watching for more developments on tariffs and trade talks. These levels won’t hold forever. Set your alerts, mark your charts, and check back for updates as conditions change.

Get ready. Stay informed. And if you’re not already trading USDCAD, open your account now and take advantage of real-time insights and market tools.