USD/CAD Price Analysis – April 29, 2025
Daily Price Outlook
During the European trading session, the USD/CAD pair reversed intraday losses and rose to around the 1.3849 level. The pair gained traction as political uncertainty in Canada weighed on the Canadian Dollar (CAD) following the country’s recent federal election.
However, the Canadian Liberal Party, led by Prime Minister Mark Carney, managed to retain power but fell short of securing a parliamentary majority, sparking concerns over political gridlock and weakened trade negotiation power with the United States.
According to early results, the Liberals were ahead in 167 seats—just 5 short of the 172 needed for a majority in Canada’s 343-seat House of Commons.
The Conservative Party was in second place with 145 seats. This unclear outcome caused pressure on the Canadian dollar (CAD), as investors worried about political uncertainty and future trade deals.
USD/CAD Supported by Renewed US-China Trade Optimism
Adding to the bullish momentum of USD/CAD was the positive sentiment surrounding US-China trade relations. The US Dollar drew strength after President Trump signaled a possible rollback of tariffs on Chinese imports.
Meanwhile, Beijing responded by announcing exemptions on select US goods, reviving hopes of a resolution to the long-standing trade conflict between the two largest economies.
Trump further reassured markets by confirming active communication with Chinese President Xi Jinping and ongoing progress in negotiations.
According to The Wall Street Journal, the US administration is considering lowering overlapping duties on automobiles and reducing tariffs on imported car parts—moves that suggest a broader shift towards easing trade barriers.
This renewed optimism around US-China ties boosted demand for the greenback, as easing trade tensions typically support global risk sentiment and strengthen the US Dollar’s appeal.
Canadian Political Instability and US Trade Signals Strengthen USD/CAD Outlook
Therefore, the combination of Canadian domestic uncertainty and growing confidence in global trade talks has tilted sentiment in favor of the USD/CAD pair.
Market participants remain cautious about the implications of Canada’s minority government, particularly its limited influence in key policy areas like trade, economic recovery, and foreign investment.
At the same time, US economic diplomacy is gaining traction, with President Trump actively pursuing measures to reduce trade frictions.
These developments reinforce bullish pressure on the USD, especially as markets shift focus to more stable and proactive economic leadership.
Going forward, traders will likely keep a close eye on Canada’s political negotiations and further US-China trade announcements, both of which could significantly influence the direction of the USD/CAD pair in the near term.
USD/CAD – Technical Analysis
USD/CAD is coiling within a symmetrical triangle pattern, showing reduced volatility as price action compresses between converging trendlines.
The pair is currently trading just below the $1.38452 pivot, with downside momentum building after a clear rejection at the triangle’s upper boundary near $1.38921.
A break below $1.38452 activates a short setup targeting $1.37828, with a stop placed above the triangle’s top near $1.38792.
Structure-wise, the pair has formed a series of lower highs since April 15, while support around $1.37973 and $1.37621 continues to attract bids — setting the stage for a breakout resolution.
The 50 SMA at $1.38592 is trending flat, reflecting consolidation rather than directional bias. However, current price action below this level, along with the recent engulfing candle, suggests bearish momentum may be brewing.
The Relative Strength Index (RSI) sits at 40.45, pointing downward and nearing oversold territory — but not yet offering divergence or reversal signals.
Should price push below the triangle's ascending trendline near $1.37973, it would likely open the door to deeper losses toward $1.37621 and potentially $1.37226. On the flip side, if bulls defend $1.38200 and reclaim $1.38592, we could see another test of $1.38921 and beyond.
Until a clean break occurs, traders should expect choppy price action within the triangle. The bias slightly favors bears as long as price remains below $1.38452.
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