USDCAD Technical Analysis – The focus remains on the tariffs

Fundamental
Overview

The USD opened higher today
and continued to dominate throughout the Asian session as we got once again
some tariffs headlines that weighed on the risk sentiment. In fact, late
yesterday Trump announced that he will impose 25% tariffs and sanctions on Colombia
because they refused to take the deported
migrants.

Colombia retaliated soon after by imposing 25% tariffs
on US imports. Late in the Asian session though, we got the news that the US
will hold the tariffs and sanctions in reserve as Colombia accepted the illegal
migrants returned from the US. That saw the US Dollar getting weaker again and
the fall in Treasury yields caused by the stock market selloff weighed on the
greenback further.

On the CAD side, the recent
Canadian
Employment report
was much stronger than expected, while the CPI report came mostly in line with forecasts
showing once again that the central bank got inflation back under control.

The CAD hasn’t responded
much to economic data recently as the focus switched to Trump’s tariffs threats
and the negative economic impact they could have on Canada. Trump said that he
intends to impose 25% tariffs on imports from Canada as soon as February 1st.
The CAD continues to underperform significantly its peers with the USD/CAD rate
remaining stuck in a roughly 150 pips range.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD broke below the major trendline but continues to range around
the highs as the spectre of 25% tariffs getting imposed on Canada on February 1st
remains. There’s not much else we can glean from this timeframe so we need to
zoom in to see some more details.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the pair continues to range between the 1.4300 support and the 1.4470 resistance. The market
participants will keep on playing the range by buying at support and selling at
resistance until we get a breakout on either side.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much we can add here as the buyers will look for a bounce around the
support or a break above the resistance, while the sellers will look for a
rejection around the resistance or a break below the support. The red lines
define the average daily range for today.

Upcoming
Catalysts

Tomorrow we get the US Consumer Confidence data. On Wednesday,
we have the BoC and FOMC Policy Decisions. On Thursday, we get the US Q4 GDP
report and the latest US Jobless Claims figures. On Friday, we conclude the
week with the US PCE and the US Employment Cost Index.

This article was written by Giuseppe Dellamotta at www.forexlive.com.