- USD/CAD steadies near 1.4260 as renewed Trump tariff fears weigh on Canada and Mexico.
- Canada’s inflation has stayed below the BoC’s target for the past three months.
- BoC Governor Macklem cautions that Trump’s tariffs could have a severe impact on Canada.
The USD/CAD pair remains firm near 1.4260 during European trading hours on Tuesday, holding onto Monday’s recovery as the US Dollar (USD) steadies. Market sentiment remains cautious after US President Donald Trump reaffirmed his plan to impose 25% tariffs on imports from Canada and Mexico starting March 4.
The US Dollar Index (DXY), which tracks the Greenback against six major currencies, trades slightly lower but stays near Monday’s recovery level around 106.70.
Trump initially postponed the tariff decision on February 4 after Canada and Mexico agreed to tighten border security to curb fentanyl trafficking and unauthorized immigration into the US. However, the proposed tariffs on Canadian imports could further strain the nation’s fragile economic outlook, with inflation consistently falling short of the Bank of Canada’s (BoC) 2% target over the past three months.
BoC Governor Tiff Macklem warned in a speech on Friday in Ontario that the economic impact of these tariffs could be severe if they are fully implemented.
Technical Analysis: Bullish Momentum in Play
