The Canadian Dollar has clawed back overnight losses against the US Dollar following reports that President Trump may implement fresh tariffs on Canadian exports, according to Scotiabank strategists Shaun Osborne and Eric Theoret. The currency pair showed initial weakness on the tariff threat before stabilizing in subsequent trading sessions. However, strategists warn that upside potential for the loonie remains constrained as long as tariff risks persist, creating a ceiling for gains against the greenback. The threat of new trade barriers poses significant concerns for Canada’s export-dependent economy, particularly given the country’s heavy reliance on US trade flows. Traders are now watching for any concrete policy announcements from Washington that could trigger renewed volatility in USD/CAD. The pair remains sensitive to trade rhetoric as markets weigh potential economic impacts on cross-border commerce.
FXnCO Insight
Canadian Dollar bulls should maintain cautious positioning with tight stops as tariff uncertainty creates a defined resistance level, limiting meaningful appreciation against the US Dollar until trade policy clarity emerges.
Source: FXStreet