Nick Goold
The USD/CAD currency pair, better known as the “Loonie/Looney” (thanks to the loon bird on Canada’s one-dollar coin), is having a wild time in the markets. And who’s behind the chaos? None other than Donald Trump, who’s following through with his plan to slap tariffs on Canada.
📢 What’s Happening?
Starting Tuesday at 5:01 GMT, Trump’s new tariffs will kick in:
✅ 25% tariffs on most Canadian exports
✅ 10% tariffs on Canadian energy exports
These tariffs have already sent the Loonie/Looney diving faster than a real loon into a lake, and traders are scrambling to figure out what’s next for USD/CAD.
Why These Tariffs Could Give Canada a Headache (and a Recession)
Canada sends the majority of its exports to the U.S., so anything that disrupts trade is bad news for its economy. Let’s break it down:
1️⃣ Canadian Goods Get More Expensive
A 25% tariff makes Canadian products less competitive in the U.S. market, which could slash demand and hurt businesses.
2️⃣ The Oil Sector Takes a Hit
Canada is a major oil exporter, and a 10% tariff on energy could cut into profits. If global oil prices drop further, expect the Loonie to wobble even more.
3️⃣ Recession Risk is Real
Economists are already worried that Canada could slip into a recession if trade tensions drag on. Less trade → weaker growth → possible job losses and lower consumer spending.
4️⃣ Bank of Canada May Cut Interest Rates
The Bank of Canada (BoC) is already on edge. Governor Tiff Macklem has warned that a "prolonged trade conflict would likely weaken GDP." If the economy keeps struggling, the BoC might cut interest rates to help out. Lower interest rates weaken the CAD, which could push USD/CAD even higher.
Trump’s Unpredictability = Loonie/Looney Volatility
One thing traders can count on? Trump’s unpredictability.
The former (and possibly future) President has a long history of using tariffs as a bargaining chip, meaning he could:
✔️ Raise tariffs even more 😱
✔️ Scrap them completely overnight 🤯
✔️ Make a sudden trade deal 🤝
This means USD/CAD could swing wildly based on one tweet, press conference, or offhand comment.
How USD/CAD Moves (and Why the Loonie/Looney is Loopy Right Now)
Several factors drive the USD/CAD exchange rate:
🔹 Interest Rates – Higher rates = stronger CAD. Lower rates (like a BoC cut) = weaker CAD.
🔹 Oil Prices – CAD is highly correlated with oil since Canada is a big exporter.
🔹 Trade Balance – If Canada exports more than it imports, CAD strengthens. Tariffs could mess this up.
🔹 Market Sentiment – When investors feel risky (risk-on), CAD goes up. When they panic (risk-off), USD gets stronger.
With Trump throwing tariffs into the mix, all these factors are in flux—making USD/CAD a trader’s playground.
Technical Outlook for USD/CAD
After reaching a 20-year high in February, USD/CAD experienced some profit-taking pressure, leading to a temporary pullback. However, the pair has since regained momentum, posting nine consecutive days of gains, signaling a strong return of the upward trend. Key support levels to watch are 1.4200, followed by 1.4100 and 1.4000, which could act as a floor if selling pressure resumes.
On the upside, resistance is seen at 1.4700, with the historic high at 1.4800, and a potential breakout could open the door to the psychological level of 1.5000. The trend remains bullish, with traders eyeing upcoming economic data and risk sentiment for further confirmation.
CADUSD Daily Chart
Trading Strategies for This Loonie/Looney Situation
📌 Trend Following – The market is in a strong uptrend across all chart timeframes, so following the trend is the best approach. Wait for a dip near support or a key moving average rather than chasing the market higher.
📌 Short-Term Countertrades – Short-term traders could consider fading extreme moves if USD/CAD rises significantly above a moving average, looking for quick pullbacks.
📌 Tariff Watch – Be ready to exit long positions or go short if tariffs are reduced or abolished, as this could shift the trend quickly.
📌 Profit Targets & Risk Management – Look for larger profit targets than usual but avoid getting too greedy. Use tight stop losses—it’s better to take a small loss and re-enter than hold onto a bad trade.
📌 Discipline & Flexibility – Volatility is high, so be adaptable and ready to react to sudden market changes.
Trump’s tariffs are bad news for Canada, and the Loonie/Looney is feeling the heat. With a potential recession, possible rate cuts, and ongoing trade drama, USD/CAD is set for more volatility.
📅 Dates to Watch:
✔️ March 12 – Bank of Canada Meeting (Could confirm rate cuts)
✔️ Anytime – Trump trade policy shifts (Which could change USD/CAD instantly)
For traders, this is high risk but also high opportunity. Keep an eye on the news, manage risk, and be ready for anything—because when it comes to Trump, tariffs, and the Loonie/Looney, expect the unexpected.
USD/CAD – Trade the Tariff-Driven Volatility with Titan FX
The latest U.S. tariff policies are injecting fresh volatility into USD/CAD, creating new opportunities for traders. With Trump escalating trade measures on Canadian exports, the Loonie/Looney is facing renewed pressure, and the market is responding with sharp price swings.
The combination of tariff uncertainty, interest rate differentials, and oil price fluctuations makes USD/CAD one of the most dynamic forex pairs to trade right now. Whether you’re looking to capitalize on breakouts or hedge against volatility, Titan FX offers the advanced tools you need to navigate these moves effectively.
Why Trade USD/CAD with Titan FX?
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With Titan FX, you can trade USD/CAD around the clock as tariff headlines drive market sentiment. Start trading today and seize these tariff-driven opportunities!
