USD/CAD advances further toward key 1.2900 area on US tariffs plan
- CAD drops after US President Trump announce 25% tariff on steel.
- USD/CAD near key technical resistance.
USD/CAD hit a fresh 2-month high at 1.2894 after the White House unveiled a plan to impose tariffs on steel and aluminium. The pair was already higher on the back of a stronger US Dollar and amid a slide in crude oil and equity prices.
Trade war looming?
President Trump mentioned today that he would sign an order next week imposing import tariffs of 25% on steel and 10% on aluminum. Why Trump plan affects Canada? Because is the largest exporter of steel to the US. Is not yet known if Canada will be exempt from the tariffs. The Canadian Trade Minister just mentioned that any US aluminium and steel tariff on Canada is “unacceptable”.
The Canadian dollar lost ground and become the worst performer of the American session.
USD/CAD levels
The pair moved of daily highs during the last minutes and it was trading at 1.2850/60, still headed toward the fourth gain in a row. The rally lost strength near a key resistance located between 1.2900 and 1.2920. That area capped the upside back in October, November and December. A consolidation on top could open the doors to more gains. So far, the resistance remains intact.
On the downside, a correction seems likely taking into account the recent rally of more than 200 pips and the proximity of the price to the key 1.2900/20 region. Support levels might be seen at 1.2845, 1.2810 (daily low) and 1.2775 (Feb 27 high).