- The USD/CAD bulls recover above 1,3600 support, consolidate in 1,3540.
- The USD/CAD remains cautious while the political and commercial uncertainty of the US weighs on the dollar.
- The commercial agreement between the US and Japan limits the losses of the USD while Canada prepares for 35% tariffs as the August deadline is approaching.
The USD/CAD is quoting slightly higher on Wednesday, oscillating just above 1,3600 level, since a commercial agreement between the US and Japan offers the dollar a short -term relief.
Despite this increase, the broader image for the US dollar remains fragile in the midst of the persistent political uncertainty around the Federal Reserve (Fed) and the increase in commercial tensions.
The commercial agreement between the US and Japan limits the losses of the USD while Canada prepares for 35% tariffs
Looking ahead, the Canadian dollar could face high volatility as the deadline of August 1 for US tariffs on Canadian goods is approaching.
Negotiations between the two countries seem to have stagnated, and US officials have confirmed that the deadline will not be extended.
The proposed measures include a 35% general tariff on Canadian imports not covered by the T-MEC commercial agreement.
This would be added to several specific tariffs per sector already in force, including a 50% tariff on steel and aluminum, a 25% tariff on car parts and a 10% tariff on energy exports such as oil, gas and potash.
Although these risks have a clear obstacle to the Canadian dollar, the currency has so far shown resilience, supported by solid internal foundations and weakness in the US dollar.
The USD/Cor bulls find temporary support above 1,3600
From a technical point of view, the USD/CAD has fallen below key levels, pointing out a possible change in the feeling of the market.
The torque is now quoted below the single mobile average (SMA) of 20 days in 1,3660 and the 50 -day SMA in 1,3713.
This confluence zone has been firmly rejected, underlining the fading of the bullish impulse. The immediate support in 1,3540 is now in the focus, a level that previously acted as a short -term soil.
A rupture confirmed below this threshold would open the door towards the minimum of September 2024 in 1,3420, marking the following significant downward objective. On the positive side, the resistance accumulates in 1,3661 and 1,3714, and only a sustained movement above this area would challenge the prevailing bearish bias.
Meanwhile, the relative force index (RSI) is 43, indicating a weakening of the impulse but still without indicating overall conditions. This suggests that there could still be room for more losses if the bearish pressure intensifies.
Tariffs – Frequently Questions
Although tariffs and taxes generate government income to finance public goods and services, they have several distinctions. Tariffs are paid in advance in the entrance port, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and companies, while tariffs are paid by importers.
There are two schools of thought among economists regarding the use of tariffs. While some argue that tariffs are necessary to protect national industries and address commercial imbalances, others see them as a harmful tool that could potentially increase long -term prices and bring to a harmful commercial war by promoting reciprocal tariffs.
During the election campaign for the presidential elections of November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy. In 2024, Mexico, China and Canada represented 42% of the total US imports in this period, Mexico stood out as the main exporter with 466.6 billion dollars, according to the US Census Office, therefore, Trump wants to focus on these three nations by imposing tariffs. It also plans to use the income generated through tariffs to reduce personal income taxes.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
