USD/CAD analysis: forms a death cross ahead of Canada election

April 25, 2025 02:04 AM PDT | By Invezz

USD/CAD analysis: forms a death cross ahead of Canada election — Image source: Invezz

Canada election ahead

The USD to CAD exchange rate has been in a strong downtrend over the past few weeks due to the decline in the US dollar index (DXY).

The key catalyst for the pair will be next week’s Canadian election on April 28. This election will be a contest between Mark Carney, the current Prime Minister, and Pierre Poilievre.

Analysts anticipate that Carney’s Liberal Party will win because of the recent trade skirmish with the United States. Before the trade war, Poilievre was expected to win because of Justin Trudeau’s low approval ratings.

As such, many Canadians see the election as a referendum on who can handle Trump better. Carney has vowed to be tough on Trump and not to cave in. While Poilievre has also vowed to protect Canada’s interests, many Canadians expect him to be softer on Trump.

Trump has implemented tariffs on Canadian goods, ending the USMCA deal that he negotiated in his first term. Most Canadian goods are being charged a 25% tariff on most goods from the United States.

Trade worth $923B to be disrupted

These tariffs are affecting goods worth over $923 billion. The US exports goods valued at over $441 billion to Canada and then imports about $482 billion. Excluding energy, the US has a trade surplus with Canada.

The USD/CAD pair will likely react mildly to the election results since the current policies will continue.

However, the most notable difference will be a Poilievre victory since he has vowed to implement some policy changes, including reducing income tax to 12.75%, increasing tax-free savings account contributions by $5,000, and deferring capital gains taxes if reinvested in the country.

Economists expect that the Bank of Canada (BoC) will continue cutting interest rates later this year as inflation continues falling. Recent data show that the headline Consumer Price Index (CPI) dropped from 2.6% in February to 2.3%.

The BoC has been cutting interest rates, moving from a high of 5% to 2.75%. It may continue cutting rates this year.

The USD/CAD pair has also declined due to the recent decline in the US dollar index. It has dropped from $110 earlier this year to below $100.

USD/CAD technical analysis

USD/CAD chart by TradingView

The daily chart shows that the USD/CAD exchange rate has dropped from a high of 1.4795 in February to the current 1.3900.

It has dropped below the 50% Fibonacci Retracement level at 1.3940. Also, the pair has formed a death cross pattern as the 50-day and 200-day Weighted Moving Averages (WMA) have crossed each other.

The pair has formed a bearish pennant pattern, which is characterized by a vertical line and a triangle pattern. Therefore, the pair will likely continue falling as sellers target the key support at 1.3735, the 61.8% retracement point.

The post USD/CAD analysis: forms a death cross ahead of Canada election appeared first on Invezz

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations, and video (Content) is a service of Kalkine Media LLC., having Delaware File No. 4697309 (“Kalkine Media, we or us”) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.