USD/CAD Reversal Risk Rises Ahead of Tariff Deadline

The USD/CAD pair is showing signs of reversing its bearish trend ahead of a looming US-Canada tariff deadline. A bullish reversal signal has emerged around major support, indicating that the bearish move may be losing momentum.

The tariff deadline on August 19th is a key event for USD/CAD, as it could determine whether the bearish trend extends or snaps back sharply. History suggests that a negative outcome could spark some form of sizeable reversal higher.

CANADA'S data has been rebounding, with Canadian surprises moving from deeply negative to sharply positive over the past two months. This improvement in the Canadian data flow has helped markets maintain expectations for a full Bank of Canada rate hike by year-end, even though underlying inflation remains relatively soft.