The USD/CAD surged sharply higher on Tuesday following news of a proposed 25% tariff on all Canadian goods by former President Trump, contingent on the continued “stream of illegal immigrants” at the border. Adam addressed the issue here: “Tariff man loses his fastball“.
The spike higher propelled the pair to its highest level since April 2020. However, sellers quickly stepped in, reversing much of the gains as broader USD selling gained momentum. The downside move extended today, supported by positive economic data and a strong 7-year note auction, further pressuring the pair lower.
The price is now testing the converged 100-hour and 200-hour moving averages at 1.40138, a critical technical level that aligns with the low of a swing area highlighted on the chart. This zone serves as a pivotal barometer for buyer and seller activity.
A sustained move below this level, coupled with a break below the psychological 1.4000 level (which also aligns with the 50% retracement), would solidify the sellers’ control.
Conversely, holding above this area could lead to a rebound toward the broken 38.2% retracement at 1.40417. A break back above that level would reinforce a bullish bias and open the door for further upside.
This article was written by Greg Michalowski at www.forexlive.com. Source