Improving Canada-U.S. Trade Relations Continue to Support the Canadian Dollar

Summary:

The Trump administration is reportedly considering cutting tariffs on Canadian auto imports from 25% to 15% as part of efforts to advance a broader U.S.-Canada trade agreement. Meanwhile, Canadian Prime Minister Mark Carney is pushing to lift some restrictions on U.S. alcohol sales in an effort to further facilitate progress in trade negotiations. If the two sides ultimately reach an agreement, Canada’s export environment could improve, providing additional support for the Canadian dollar and putting further downward pressure on USD/CAD.

Buy USDCAD

EXP

PENDING

1.36700

ENTRY

1.38700

TGT

1.34300

1.39242 +0.00295 +0.21%

Point

PENDING

1.34300

CLOSING

1.36700

ENTRY

1.38700

TGT

Fundamentals

According to people familiar with the matter, the Trump administration is considering reducing tariffs on Canadian auto imports from 25% to 15% as part of a broader trade agreement. In return, Canada would remove some of its retaliatory trade measures against the United States.

The White House previously imposed a 25% tariff on foreign-made cars and trucks. For vehicles produced in Canada and Mexico, the tariff applies only to the non-U.S. content of those vehicles, a policy designed to encourage automakers to shift more production to the United States.

People familiar with the negotiations said the proposed 15% tariff could continue to be calculated based on the non-U.S. content of vehicles. However, the details of the agreement have not yet been finalized. Given that Trump has previously modified the terms of trade agreements at the last minute or even scrapped deals that appeared close to completion, considerable uncertainty remains over whether the current negotiations will ultimately be finalized.

Meanwhile, Canadian Prime Minister Mark Carney is seeking to end some of Canada’s restrictions on the retail sale of U.S. alcoholic beverages, hoping that further trade concessions will help push the U.S.-Canada trade agreement toward completion.

Overall, if the U.S. and Canada continue to reduce trade barriers, Canada’s export environment and market sentiment could improve. This may provide additional fundamental support for the Canadian dollar and limit the upside potential of USD/CAD.

Improving Canada-U.S. Trade Relations Continue to Support the Canadian Dollar_1

Technical Analysis

After a brief consolidation, USD/CAD has resumed its broader decline from 1.4248. The intraday bias remains bearish, with near-term attention focused on support around 1.3775, which corresponds to the 61.8% Fibonacci retracement of the 1.3480–1.4245 advance.

A decisive break below 1.3775 would signal further room for a medium-term correction, potentially exposing the previous low and demand zone around 1.3630.

On the upside, a renewed break above the short-term resistance at 1.3909 would weaken the current bearish structure and could shift the intraday bias back to neutral, opening the door to a test of higher resistance levels.

Trading Strategy

Direction: Buy

Entry: 1.3670

Target: 1.3870

Stop Loss: 1.3430

Strategy Valid Until: September 18, 2026, 23:55

Support: 1.3732, 1.3710, 1.3670

Resistance: 1.3777, 1.3876, 1.3968

Risk Warnings and Investment Disclaimers

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Eva Chen

Analysts

Master of Economics, 8 years in the financial industry, CFA holder, joined HSBC (Hong Kong) Bank in 2013 after graduating from the University of California, USA in the Investment Research and Markets Department. With years of financial market experience and trading experience, having provided excellent investment advice to many brokerages, entity derivatives importers and clients in Greater China.

Rank

Articless

2734

Win Rate

60.59%

P/L Ratio

0.67

Focus on

XAUUSD, WTI, GBPUSD

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