The US dollar gained modest ground against the Canadian dollar, with USD/CAD rising above 1.4250, as investors reacted to ongoing tariff concerns and broader market uncertainty. While the greenback has struggled to extend its rally, lingering trade policy risks have kept safe-haven demand intact, limiting downside moves.
Fresh tensions over US trade policies have raised concerns about potential economic disruptions, prompting traders to favor the US dollar over risk-sensitive currencies like the Canadian dollar. Markets are assessing whether new tariffs on key trading partners could disrupt supply chains and weigh on global growth, adding another layer of uncertainty to currency markets.
Meanwhile, oil prices remain volatile, offering mixed signals for the Canadian dollar, which is closely tied to energy markets. While crude prices initially rebounded, concerns over slowing global demand and rising US production have tempered gains, keeping the loonie from capitalizing on stronger oil prices.
From a technical perspective, USD/CAD faces resistance near 1.4280, with a break above this level potentially opening the door for further upside. However, if sentiment shifts and tariff fears ease, the pair could retreat toward 1.4200, where buyers may look to step in.
Looking ahead, traders will focus on US inflation data, Federal Reserve commentary, and trade policy developments, all of which could dictate the dollar’s direction. Any signs that inflation is cooling faster than expected may reinforce expectations of Fed rate cuts, weighing on USD/CAD, while further tariff-related uncertainty could continue to support the pair.
For now, USD/CAD remains supported above 1.4250, but its ability to extend gains depends on market sentiment surrounding trade policy and economic growth outlooks. If risk appetite improves, the Canadian dollar could gain ground, but further trade disruptions may keep demand for the US dollar elevated.
