04 Apr 2025

The USD/CAD currency pair has rebounded from the 200-day EMA, approaching the 1.4160 level ahead of the employment reports for March from both the US and Canada. The tariffs imposed by President Trump are anticipated to negatively impact the global economic outlook. Federal Reserve Chair Jerome Powell is expected to offer insights into how inflation driven by these tariffs may influence future monetary policy.

On Friday, during European trading hours, the USD/CAD pair recovered to nearly 1.4160 after hitting an almost four-month low of 1.4026 the previous day. The Canadian dollar, or Loonie, has strengthened as the US Dollar (USD) garners support, despite concerns regarding the economic outlook due to the announcement of reciprocal tariffs by President Trump.

The US Dollar Index (DXY), which measures the value of the dollar against six major currencies, has risen to approximately 102.60 from a recent low of 101.25.

Market analysts suggest that Trump's tariffs could lead to a spike in inflation and hinder economic growth. Nevertheless, Trump remains optimistic that his protectionist measures will boost manufacturing employment in the US.

In the meantime, investors are looking forward to the labor market statistics from both the US and Canada, scheduled for release at 12:30 GMT. It is projected that the US economy added 135,000 jobs, while Canada is expected to have gained 12,000 jobs in March. Additionally, during the North American trading session, attention will be directed towards Chair Powell's speech for further insights into the monetary policy trajectory.

USD/CAD has rebounded from a low of 1.4026, currently testing the horizontal support level established from the February 17 low, which is around 1.4160. The pair experienced a recovery after finding buying interest near the 200-day Exponential Moving Average (EMA), located at approximately 1.4070.

The 14-day Relative Strength Index (RSI) is struggling to rise above the 40.00 mark. A new bearish trend may emerge if the RSI does not manage to surpass this level.

A further decline could occur if the pair falls below the December 6 low of 1.4020. This would bring the psychological support level of 1.4000 into play, followed by the low of 1.3927 recorded on November 25.

Conversely, the pair would gain strength if it surpasses the April 3 high of 1.4320. In this case, the major could rise towards the April 1 high of 1.4415 and the March 14 high of 1.4447.