USD/CAD Forecast: Loonie Faces Stormy Skies Forward…

• The USD/CAD pair rallied within the latter components of 2024.

• Trump proposed a 25% tariff on items imported from Canada.

• The loonie stays weak after the Fed’s hawkish December assembly.

The USD/CAD forecast exhibits uncertainty for the Canadian greenback within the new yr amid anticipated US tariffs, a hawkish Fed, and political uncertainty in Canada. Nevertheless, the loonie rebounded Thursday because the greenback eased on the primary buying and selling day of 2025.

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The USD/CAD pair rallied within the latter components of 2024 resulting from a number of components which may spill into the brand new yr. Markets had been anticipating a weaker economic system after Trump proposed a 25% tariff on items imported from Canada. Trump will take workplace this month. Canada’s economic system will likely be considerably affected if Trump executes this new coverage. On the similar time, the Financial institution of Canada can be beneath plenty of stress to chop rates of interest and spur financial progress.

In the meantime, the loonie stays weak after the Fed’s hawkish December assembly. The US central financial institution lowered its projection for fee cuts this yr, resulting in a rally within the greenback and Treasury yields. Notably, market individuals will take note of financial knowledge, which is able to doubtless verify this new outlook. Consultants consider that Trump’s new administration will increase progress and result in a spike in client inflation. Subsequently, policymakers will doubtless stay cautious about fee cuts, and the buck will rally. 

Then again, political uncertainty in Canada may additional weaken the loonie. Notably, there may be huge stress on Prime Minister Justin Trudeau to step down since his occasion would possibly lose early this yr.

USD/CAD key occasions in the present day

USD/CAD technical forecast: 1.4450 resistance triggers consolidation

On the technical aspect, the USD/CAD worth ranges between the 1.4350 help and the 1.4450 resistance ranges. On the similar time, it’s chopping by means of the 30-SMA, an indication that each bears and bulls are robust. 

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Beforehand, bulls had been within the lead as the worth traded above the 30-SMA, with the RSI above 50. Nevertheless, the uptrend paused on the 1.4450 resistance stage. Right here, bears emerged with as a lot power, resulting in a pause within the bullish pattern. 

The value presently sits above the 30-SMA, which means that bulls will quickly retest the vary resistance. A break above will sign a continuation of the earlier uptrend. Nevertheless, if the worth breaches the vary help, it’ll doubtless fall again to the 1.4200 help stage.

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