USDCAD Price Forecast: Trade and Economic Data Drive Sentiment

24/01/2025

The USDCAD price remains on the back foot after meeting strong selling pressure above 1.4400 in Thursday’s New York session. The market participants await key developments in economic data and US trade policies. Moreover, the primary focus remains on the US PMI reports for January, which could significantly influence currency movements.

Fundamentals

The market is cautious after Trump’s potential tariff announcement on imports from Canada, China, Mexico and the European Union, scheduled from 1^st Feb. As further details are limited, the Canadian dollar remains vulnerable. Canada’s retail sales fell shorter than expected, with crude oil fading the buying momentum. Hence, any gains in the Canadian dollar may remain capped due to this factor.

President Trump reiterated his demands to cut interest rates immediately, saying he knows better about monetary policies than those setting them. However, the Fed policy meeting regarding the rate decision will remain unchanged. However, stronger economic data and rising inflation suggest the dollar will maintain its strength.

Today’s US PMI data remains vital as investors count on it to gauge the Fed’s future policy. Positive numbers can boost the dollar’s strength.

Technical Analysis

The USD/CAD 4-hour chart shows that the price remains in a broad range with strong selling pressure. The 30-period SMA remains flat, showing no clear trend bias, while the price has recently moved below the SMA with strong bearish candles. However, the price remains supported by the downside of the range around the 1.4300 area. The RSI also falls below 50.0, which indicates a mounting selling pressure.