Trump’s 25% Tariff Threat and USD/CAD’s Expanding Range
USD/CAD has quickly become the currency pair to watch as Donald Trump’s tariff threats shake the foundations of North American trade. With rising political uncertainty on both sides of the border and increasingly volatile price action, this pair is presenting both risks and opportunities for traders.
Trump’s 25% Tariff Threat
Donald Trump wasted no time making waves, threatening Mexico and Canada with 25% tariffs on the first day of his new term. These proposed levies are tied to border security concerns and the ongoing fentanyl trafficking crisis, which Trump has made a key part of his trade agenda.
The announcement sent a volatility shock through currency markets, causing the Mexican peso and Canadian dollar to drop. This sharp reaction was compounded by a sense of whiplash— traders had been anticipating a more measured approach after administration officials hinted at restraint. Instead, they were met with heightened uncertainty, a hallmark of Trump’s economic style.
Canada now finds itself in a precarious position. Heavily reliant on trade with the US, its economy is already feeling the weight of these tariff threats. As Trump pushes forward with his protectionist agenda, heightened volatility in the USD/CAD pair is likely to persist.
Technical Analysis: USD/CAD’s Expanding Range
After a strong rally from October to December, USD/CAD has spent the start of the year consolidating. At first, the pair moved within a narrow, orderly trading range, but that calm has given way to a more erratic and volatile expanding range pattern. This shift is a direct result of escalating trade tensions and Canada’s own domestic uncertainties.
False breakouts on both sides of the range have become a defining feature. These moves have rattled traders looking for directional clarity, with each false breakout appearing to test the boundaries of the market’s patience. As the expanding range widens, the pair signals an intense tug-of-war between bullish momentum and growing unpredictability.
To place this volatility in context, Keltner Channels are an essential tool. They adapt to the increasing volatility while maintaining a focus on the broader trend. A look at the daily chart shows USD/CAD remains above the midline of the Keltner Channel, affirming that the long-term uptrend is still intact. However, the bands are widening significantly, reflecting the heightened uncertainty that traders must contend with.
USD/CAD Daily Candle Chart
Past performance is not a reliable indicator of future results
Traders should approach this pair with caution:
• Key support and resistance levels within the expanding range will be critical to watch.
• A breakout beyond the upper Keltner Channel, coupled with rising volume, could signal the start of a new trend leg.
• It’s essential to account for the volatility when setting stop losses or calculating position sizes. Overly tight stops could easily be triggered by sharp intraday moves, while wider stops demand disciplined risk management.
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. 83% 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.
Trump’s 25% Tariff Threat
Donald Trump wasted no time making waves, threatening Mexico and Canada with 25% tariffs on the first day of his new term. These proposed levies are tied to border security concerns and the ongoing fentanyl trafficking crisis, which Trump has made a key part of his trade agenda.
The announcement sent a volatility shock through currency markets, causing the Mexican peso and Canadian dollar to drop. This sharp reaction was compounded by a sense of whiplash— traders had been anticipating a more measured approach after administration officials hinted at restraint. Instead, they were met with heightened uncertainty, a hallmark of Trump’s economic style.
Canada now finds itself in a precarious position. Heavily reliant on trade with the US, its economy is already feeling the weight of these tariff threats. As Trump pushes forward with his protectionist agenda, heightened volatility in the USD/CAD pair is likely to persist.
Technical Analysis: USD/CAD’s Expanding Range
After a strong rally from October to December, USD/CAD has spent the start of the year consolidating. At first, the pair moved within a narrow, orderly trading range, but that calm has given way to a more erratic and volatile expanding range pattern. This shift is a direct result of escalating trade tensions and Canada’s own domestic uncertainties.
False breakouts on both sides of the range have become a defining feature. These moves have rattled traders looking for directional clarity, with each false breakout appearing to test the boundaries of the market’s patience. As the expanding range widens, the pair signals an intense tug-of-war between bullish momentum and growing unpredictability.
To place this volatility in context, Keltner Channels are an essential tool. They adapt to the increasing volatility while maintaining a focus on the broader trend. A look at the daily chart shows USD/CAD remains above the midline of the Keltner Channel, affirming that the long-term uptrend is still intact. However, the bands are widening significantly, reflecting the heightened uncertainty that traders must contend with.
USD/CAD Daily Candle Chart
Past performance is not a reliable indicator of future results
Traders should approach this pair with caution:
• Key support and resistance levels within the expanding range will be critical to watch.
• A breakout beyond the upper Keltner Channel, coupled with rising volume, could signal the start of a new trend leg.
• It’s essential to account for the volatility when setting stop losses or calculating position sizes. Overly tight stops could easily be triggered by sharp intraday moves, while wider stops demand disciplined risk management.
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. 83% 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.
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