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Tacotrade

Is it too late for a TACO trade on USD/CAD? USD/CAD jumped nearly 900 pips on Monday after President Donald Trump announced he is “terminating” trade negotiations with Canada. But the surge didn’t stick. Within hours, the pair gave up most of its gains, slipping back below the 1.3700 breakout level. There’s been no reversal from Trump — not yet. But price action suggests the market might be front-running one. Traders have seen this before: the “TACO” setup — Trump Always Chickens Out. In that context, traders may be cautious about chasing the spike without confirmation that the trade breakdown will be long-lasting. The USD/CAD trade now hinges on updates from Trump for more TACO setups. If USD/CAD stays below 1.3700, the focus shifts back to 1.3628 and possibly lower. Below that, the long-term structure suggests a broader range between 1.3500 and 1.3770.
by BlackBull_Markets
What is the TACO trade in forex trading? The “TACO trade” – short for “Trump Always Chickens Out” – originated in equity markets but is equally relevant in forex. The pattern is simple: Trump signals aggressive tariffs, markets react and then reverse when the threat is walked back. One example: In May 2025, the U.S. dollar weakened sharply after Trump announced a 50% tariff on EU imports. EUR/USD rallied to 1.1440 as traders priced in slower U.S. growth. But just days later, the Trump delayed the tariffs to July, and the dollar quickly regained ground. For forex traders, the TACO trade strategy is about timing: entering on initial panic and exiting on the rollback. That said, it’s not without risk. If tariffs are actually enforced, the dollar’s decline may be more prolonged. And with markets increasingly aware of this pattern, reactions may become less predictable.
by BlackBull_Markets