Canadian Dollar Pares Recent Gains As Trade War Rhetoric Heats Up

By Joshua Gibson of FX Street

Thursday, March 27, 2025 7:40 PM EDT

The Canadian Dollar fell 0.32% against the Greenback on Thursday.
Loonie markets are recoiling as Canada and the US gear up for a messy trade war.
USD/CAD returns to familiar technical territory near 1.4300.

The Canadian Dollar (CAD) shed weight on Thursday, paring away recent gains against the US Dollar (USD) as trade war rhetoric between the US and Canada ramps up. World leaders are quickly growing tired of US President Donald Trump’s constant waffling on tariffs he is, then isn’t, imposing across the board. Market nerves have completely frayed from reacting to President Trump’s ham-handed trade policy approach, and investors are pulling into a wait-and-see period ahead of Donald Trump’s self-imposed April 2 deadline to impose a sweeping package of tariffs.

Canadian Prime Minister Mark Carney struck back against recent tariff headlines, cautioning that Canada is prepared to take retaliatory measures against the US. President Trump’s self-imposed deadline of April 2 to impose a sweeping tariff policy handbook that includes “reciprocal” tariffs, additional tariffs on Copper, even more additional tariffs on Canadian lumber specifically, and yet even more tariffs on countries that buy Crude Oil from Venezuela.

Daily digest market movers: Canadian Dollar eases as Canada hearse up for tariff fight

The Canadian Dollar gave up recently gained ground on Thursday, falling roughly one-third of one percent against the Greenback.
Canadian PM Mark Carney: We will fight the US tariffs with actions of our own.
Headway on possible tariff concessions which US President Trump may or may be willing to grant on a per-case basis remains difficult.
As noted by Canadain PM Carney, nobody is really clear on what tariffs the US plans to actually enact, nor has the Trump administration been clear on what they want in exchange for tariff relief.
Key US inflation figures are due on Friday. Personal Consumption Expenditure (PCE) Price Index inflation comes just ahead of the Trump administration’s self-imposed tariff deadline of April 2.

Canadian Dollar price forecast

The Canadian Dollar’s Thursday walkback saw the Loonie shed some 45 pips against the US Dollar. Market flows continue to favor the Greenback on a near-term basis as risk-off flows begin to ramp up.

USD/CAD remains pinned to the 50-day Exponential Moving Average (EMA) near 1.4320 as near-term momentum continues to grind sideways. The pair has remained trapped in a choppy sideways channel as the congestion grind that started four months ago continues unabated.