The USD\/CAD pair trades closely around 1.3835, nearing its week-long low of 1.3815, as traders await US President Donald Trump’s address at the World Economic Forum in Davos. The pair sees a narrow range due to US-EU tensions, with recent US tariffs of 10% on several EU nations over the Greenland dispute. <\/p>\n
The US Dollar Index hovers near 98.50, reflecting cautious trading. A slip below 1.3800 could lead to further declines towards support at 1.3700, with resistance seen at the 50% Fibonacci retracement level of 1.3893. Technical resistance might extend the pair’s gains to the 61.8% Fibonacci level of 1.3952 if breached. <\/p>\n
Currently, the Relative Strength Index is neutral at 49, indicating a balanced momentum. The 20-Exponential Moving Average slightly caps any attempts at a rebound, standing marginally over the spot price at 1.3837. US Treasury Secretary Scott Bessent has advised against retaliation over the US tariffs, suggesting restraint to allow matters to resolve. <\/p>\n
President Donald J. Trump, the 47th US President, took office initially in January 2017 and was re-elected in January 2025. Prior to his political career, he was known as a businessman and television personality, representing the Republican party.<\/p>\n
Looking back to this time last year, in January 2025, we saw the market was at a standstill ahead of the Davos speech. The escalating US-EU tariff situation over Greenland had traders on edge, keeping USD\/CAD locked in a tight range around 1.3835. This period of uncertainty set the stage for significant volatility that followed.<\/p>\n
Following that speech, the US did increase tariffs to 15% by March 2025, and the EU retaliated with their own duties on American goods. This trade spat caused the US Dollar Index (DXY) to fall from the 98.50 level to below 95 by the end of Q1 2025. Consequently, we saw USD\/CAD break below 1.3800 and test the 1.3700 support level as predicted.<\/p>\n
Now, in January 2026, the diplomatic situation has stabilized, but the economic effects are still with us. Lingering supply chain issues from the 2025 dispute have contributed to US core inflation holding stubbornly at 3.4%, according to last week’s CPI report. This is forcing the Federal Reserve to maintain a hawkish stance, unlike the Bank of Canada which is signaling a more neutral policy.<\/p>\n
Given the divergence in central bank policy, we see an opportunity for USD strength against the CAD in the coming weeks. Traders could consider buying call options on USD\/CAD with a strike price around 1.3950, anticipating a move back towards the levels seen before the 2025 tensions. Implied volatility remains elevated compared to 2024 levels, reflecting the market’s memory of last year’s tariff shock.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/CAD steadies near 1.3835 as traders eye Trump\u2019s Davos speech and monitor tariff tensions.<\/p>\n","protected":false},"author":62,"featured_media":16961,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-39730","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/39730","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=39730"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/39730\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16961"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=39730"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=39730"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=39730"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}