The USD/CAD price analysis shows a brighter future for the Canadian dollar since Trump paused a 25% tariff on Canadian goods. Meanwhile, market participants are gearing up for employment figures from Canada and the US that will guide monetary policy in both countries.

The Canadian dollar has gained sharply since Trump paused an expected 25% tariff on Canadian goods. The tariff had dimmed the outlook for an economy that exports nearly 70% of its goods to the US. Moreover, economists were predicting a more aggressive Bank of Canada easing cycle to balance the impacts of tariffs. However, Canada managed to negotiate better trade deals, giving the country more time. 

At the same time, since the pause, traders are more convinced that Trump is only using the threat of tariffs as a negotiation tactic. Therefore, there is little risk of global trade wars.

Elsewhere, Canada and the US are set to release their monthly employment figures, which will shape the outlook for BoC and Fed rate cuts. Economists expect slower job growth in both countries. Meanwhile, unemployment might increase in Canada and hold steady in the US. Weak data will increase rate-cut bets for the BoC and Fed. Meanwhile, upbeat figures might lower rate cut expectations.

USD/CAD key events today

• Canada employment change
• Canada unemployment rate
• US average hourly earnings m/m
• US nonfarm employment change
• US unemployment rate

USD/CAD technical price analysis: Price falls back into the range area

(Click on image to enlarge)

USD/CAD 4-hour chart

On the technical side, the USD/CAD price has paused its decline near the 1.4300 support level. The price still trades well below the 30-SMA with the RSI below 50, suggesting a strong bearish bias. 

Bears took charge after a large bullish gap that pushed USD/CAD to a new high. Soon after, the price filled the gap and fell back below the 30-SMA. At the same time, the price fell back into its previous range between the 1.4300 support and the 1.4450 resistance. However, this time, bears are showing stronger momentum. 

Therefore, the price might break below the range resistance to start a new downtrend. On the other hand, if bulls are also strong, the price will bounce off the range support to retest the range resistance level. Such an outcome would indicate a continuation of the previous range.

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