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07/04/25
97
USD/CAD Soars Amid Oil Price Decline and Trade Tensions
The USD/CAD currency pair is experiencing an upswing for a second consecutive day, buoyed by a mix of contributing factors. The Canadian dollar, often influenced by oil prices, is under pressure as crude values have dipped significantly, reaching levels not seen in four years. This decline stems from rising fears that proposed tariffs by the U.S. could ignite a global trade conflict and subsequently diminish demand for fuel. Additionally, eight OPEC+ nations have taken steps to retreat from their production cutbacks, raising concerns about market oversupply and further impacting oil prices.
Political uncertainty in Canada, particularly in the lead-up to the snap election scheduled for April 28, compounds the challenges faced by the Canadian dollar. Recent domestic employment figures have also disappointed, further weighing on the Loonie and enhancing the appeal of the USD/CAD pair, which is trading around the mid-1.4200 range and up by nearly 0.25% for the day. Traders are closely monitoring the movement of prices, particularly looking for an upward breach past the 100-day Simple Moving Average to generate confidence in further buying.
The escalating trade tensions between the U.S. and Canada suggest that the USD/CAD pair may continue to trend upward. Authorities in Canada have confirmed that previously announced retaliatory tariffs will persist, with the country imposing a significant 25% tariff on U.S. vehicle imports that do not comply with trade agreements. This stance, coupled with a wave of U.S. dollar buying following a decline during the Asian session, has provided additional backing for the pair.
The U.S. dollar has held onto its recent gains following an unexpectedly strong jobs report and positive commentary from the Federal Reserve. However, concerns about a potential economic slowdown due to tariff impacts may limit significant appreciation for the U.S. currency in the near term, warranting caution among bullish traders in the USD/CAD market.
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