USDCAD may return to 1.435 as April 2 approaches

USDCAD started this week with declining. The quotes are approaching the level of 1.425 for the third time in March. At this level, the bulls may seize the initiative. Buyers of the Canadian dollar against the greenback are not likely to risk, it is more reasonable for them to take at least part of the profit and wait for next week’s events. As April 2 approaches, financial markets are likely to experience a sharp surge in volatility. 

Investors are trying to guess the scale of import duties announced by the US president. Recently, Donald Trump has hinted that not all of the tariffs he mentioned would take effect at the beginning of next quarter. However, the final decision on this question remains unclear, as well as possible damage for the Canadian economy. Still, some forecasts are worth considering. 

Yesterday, Quebec Finance Minister, Eric Girard, provided an updated estimate of the province’s financial health. Canada’s second most economically important province risks losing 0.7% of GDP growth in 2025 and 2026, if the US imposes 10% duties. In case of 25% tariffs, Quebec’s economy will fall into recession. British Columbia and Alberta provided similar forecasts. Ontario, the key region of the country, has not released the report yet, but the estimates are likely to be similarly pessimistic. 

Meanwhile, Reuters highlights another risk for Canada. The new prime minister, Mark Carney, has called a snap election for April 28, and until results are in, the functioning of the government will be limited. It is unclear whether Canadian officials will be able to agree on retaliation to the US tariffs. If Carney and his supporters try to take the initiative, it will certainly cause discontent in the opposition and further complicate the situation in the country.

As the quotes are getting closer to 1.425, buying USDCAD with the expectations of an upward rebound is getting more attractive. In case of opening long positions, the short-term target will be 1.435. 

Consider the following trading strategy:

Buy USDCAD near the level of 1.425. Take profit – 1.435. Stop loss – 1.42.