The USDCAD briefly rose after President Trump announced a 35% tariff on Canadian imports. This initial rise was driven by concerns about national security related to fentanyl smuggling and a trade deficit. However, the rally quickly fell apart, and prices reversed.

Technical Levels and Price Movement

On Friday, prices moved above important technical levels, such as a swing level at 1.3710 and the 38.2% retracement level of the May high at 1.37208. But the bullish trend didn’t last. During the North American session, the price dropped back below 1.3710. A stronger-than-expected jobs report increased volatility, but the pair couldn’t reach the highs set earlier that week. Resistance caused a drop toward the 100-hour moving average, around 1.3682, which acted as a pivot in the volatile market. The 200-hour moving average is also nearing the support zone at 1.3649-1.3651. The pair’s struggle to keep its momentum reflects trader caution, likely due to USMCA exemptions. Unless the pair breaks above 1.3710 or drops below 1.3649, expect it to continue trading within this range, guided by moving averages. What we’ve witnessed is a classic example of initial excitement fading into broader uncertainty. After the initial rise spurred by the tariff news and its potential impact on trade, resistance became a challenge just above the 1.3720 area. This rejection, despite briefly breaking some targets, shows how even big news can fall flat against established supply zones when there’s a lack of strong support. By the end of Friday, the drop below 1.3710 shifted the tone to one of hesitation. This was made worse by the release of a stronger-than-expected US employment report. Normally, a positive jobs report would boost the dollar, but this time it caused significant volatility without pushing prices in one clear direction. It’s likely that the mix of strong domestic economic data and political trade risks is canceling each other out for now.

Support Levels and Patience Strategy

Support levels have become increasingly important. The immediate support around 1.3682, linked to the 100-hour moving average, has acted more like a balancing point than a strong foothold. Prices have been fluctuating around this level, indicating a lack of commitment from either side. Below this lies the support zone from 1.3649 to 1.3651. With the 200-hour moving average rising toward this area, we reach a crucial point. A confirmed close through this level, supported by volume, could suggest further declines. Conversely, closing above 1.3710 in the daily chart, especially through the next London or New York session, could lead to a retest of the week’s highs. From our viewpoint, prices are considering fundamental data against broader uncertainties, particularly regarding trade policy stability. Actions should focus on responses to these critical levels instead of trying to guess the direction. The environment right now requires quick adjustments rather than fixed opinions. Traders should set expectations based on clearly defined levels, using moving averages as guides, while avoiding assumptions driven by headlines. Volatility is likely to persist, but that doesn’t mean things will become clearer. Wait for consistent closes instead of jumping at immediate price changes. No current technical pattern shows a strong breakout possibility on its own. Patience and responses to shifts in structural levels remain our preferred strategy until clearer momentum emerges. Create your live VT Markets account and start trading now.

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