Trump and Trudeau Cause USD/CAD Reversal
USD/CAD broke lower on Monday, surprising traders who had been expecting a continuation of the uptrend. Political developments in both the US and Canada were the catalysts behind this sharp move, with the pair closing below a key consolidation range.
US Dollar Weakens on Trump Tariff News
The US dollar weakened after reports suggested that Donald Trump might scale back plans for sweeping tariffs on imports. Markets had initially priced in broad-based duties of 10% or more, but news of a narrower scope shifted sentiment. This sparked a relief rally in competing currencies, pulling the dollar index down by 0.7%.
Although Trump quickly dismissed the report as “fake news,” the damage to the greenback was already done, as traders reassessed the inflationary and economic implications of the potential policy shift.
Trudeau’s Resignation Lifts the Loonie
In Canada, Prime Minister Justin Trudeau’s announcement of his resignation marked the end of nearly a decade in office. His departure, driven by internal party pressures and declining public support, injected optimism into Canadian markets.
The Canadian dollar gained as traders welcomed the potential for political renewal ahead of elections later this year, with hopes for more stable governance and economic policies boosting confidence in the currency.
Technical Breakdown for USD/CAD
USD/CAD had been in a strong uptrend since mid-September, with the 50-day moving average diverging above the 200-day moving average. Over the holiday period, the pair entered a tight sideways consolidation range, a pattern often seen as a continuation signal during a bullish trend.
However, Monday's political developments caused a break below the consolidation range, with the pair closing below key support levels. This move sets up the potential for a deeper retracement, with the 50-day moving average as the next critical level to watch.
USD/CAD Daily Candle Chart
Past performance is not a reliable indicator of future results
Zooming in on the hourly chart reveals that USD/CAD has begun forming a series of lower swing highs, creating a descending trendline. This trendline serves as a key indicator for traders navigating the potential reversal.
While the long-term uptrend remains intact, traders should be cautious of a possible fakeout. A decisive break back above the descending trendline and into the previous range could signal short sellers to cover their positions, negating the bearish setup.
USD/CAD Hourly Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.67% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
US Dollar Weakens on Trump Tariff News
The US dollar weakened after reports suggested that Donald Trump might scale back plans for sweeping tariffs on imports. Markets had initially priced in broad-based duties of 10% or more, but news of a narrower scope shifted sentiment. This sparked a relief rally in competing currencies, pulling the dollar index down by 0.7%.
Although Trump quickly dismissed the report as “fake news,” the damage to the greenback was already done, as traders reassessed the inflationary and economic implications of the potential policy shift.
Trudeau’s Resignation Lifts the Loonie
In Canada, Prime Minister Justin Trudeau’s announcement of his resignation marked the end of nearly a decade in office. His departure, driven by internal party pressures and declining public support, injected optimism into Canadian markets.
The Canadian dollar gained as traders welcomed the potential for political renewal ahead of elections later this year, with hopes for more stable governance and economic policies boosting confidence in the currency.
Technical Breakdown for USD/CAD
USD/CAD had been in a strong uptrend since mid-September, with the 50-day moving average diverging above the 200-day moving average. Over the holiday period, the pair entered a tight sideways consolidation range, a pattern often seen as a continuation signal during a bullish trend.
However, Monday's political developments caused a break below the consolidation range, with the pair closing below key support levels. This move sets up the potential for a deeper retracement, with the 50-day moving average as the next critical level to watch.
USD/CAD Daily Candle Chart
Past performance is not a reliable indicator of future results
Zooming in on the hourly chart reveals that USD/CAD has begun forming a series of lower swing highs, creating a descending trendline. This trendline serves as a key indicator for traders navigating the potential reversal.
While the long-term uptrend remains intact, traders should be cautious of a possible fakeout. A decisive break back above the descending trendline and into the previous range could signal short sellers to cover their positions, negating the bearish setup.
USD/CAD Hourly Candle Chart
Past performance is not a reliable indicator of future results
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.67% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Disclaimer
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