Currency markets opened on Monday with the US dollar under pressure, as traders assessed weekend developments related to US tariff policy. According to Reuters:

→ On Friday, the Supreme Court ruled that President Trump’s sweeping tariffs exceeded his authority.
→ In response, the US president criticised the court and introduced a blanket 15% import levy. Trump also insisted that higher-tariff agreements with trade partners should remain in force.

Against this backdrop, USD/CAD slipped below the 1.3660 level today. This comes despite the upward move observed since 11 February (marked by purple lines), which developed after Canadian inflation slowed from 2.7% to 2.4%. The weaker inflation data weighed on the Canadian dollar, as markets began pricing in the possibility of future interest rate cuts by the Bank of Canada.

Technical Analysis of the USD/CAD Chart

When analysing USD/CAD on 29 January (with the market trading near the psychological 1.3500 level), we:

→ highlighted the presence of a long-term descending channel;
→ noted that price was close to its lower boundary, which could act as support;
→ considered a rebound scenario.

Since then, USD/CAD has formed two bullish reversals near the 1.3500 area. However, on both occasions bullish momentum appeared to fade around 1.3700.

The current price action resembles a rounding top pattern, suggesting that sellers may soon attempt to regain control and push towards the lower purple boundary in an effort to resume the broader long-term downtrend.

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