USDCAD down again and below the low of the “Red Box”

The USDCAD has experienced significant volatility over the past five trading days, largely driven by uncertainty surrounding tariffs. Last week, the price broke higher, moving outside the “red box” range that had confined trading since December 17. This breakout was exacerbated on Monday following the announcement of a potential 25% tariff, which was later delayed for 30 days by Monday’s close.

The delayed tariff news led to a pullback in the price yesterday and a more modest decline today. Today’s move has pushed the price below the lower boundary of the “red box” range, defined between 1.42905 and 1.43043, which now serves as key resistance. Staying below this area keeps sellers in control and opens the door to further downside. Conversely, a move back above this range would signal a failed breakdown, disappointing bearish traders.

Looking back to January 20 (Inauguration Day), a similar volatile move saw the price dip below the lower swing area of the “red box” only to find support and rebound higher. Traders are now on high alert, with sellers maintaining an edge. On the downside, watch the 1.4260–1.4270 zone closely—a move below this range would reinforce the bearish bias.

This article was written by Greg Michalowski at www.forexlive.com.