USD/CAD Slips as Trump Threatens Powell Again

The USD/CAD pair isn’t going anywhere fast, and there’s a good reason: we are caught between a crumbling U.S. dollar and a softening Canadian economy. Hovering near the 20-day EMA, the pair dipped slightly to 1.3718 during Thursday's Asian session, but the real action is behind the headlines.

In yet another swipe at the Fed, President Trump is once again publicly threatening to remove Jerome Powell. This came after Powell’s congressional testimony in which he urged caution, saying the Fed is "well positioned to wait and learn" before making any policy shifts.

Markets didn’t take it lightly. The U.S. Dollar Index (DXY) plunged to 97.25, marking a fresh 3-year low. For USD/CAD traders, that sets the tone: more political drama, more dollar weakness.

The Canadian side isn’t exactly a rock either. CPI came in at 1.7% YoY, exactly in line with expectations but still below the BoC’s 2% target. Core inflation held at 2.5%, but traders are betting the Bank of Canada could cut rates again if price growth doesn’t pick up.

So while the greenback is slipping, the loonie isn’t flexing much muscle either.

USD/CAD is loitering around the 20-day EMA at 1.3717, with the RSI trapped between 40 and 60, a textbook sign of indecision and fading volatility.

If bulls can break through 1.3820, they’ll likely target 1.3920 and then 1.4000, marking highs from late May. But if price slips below 1.3540, it could open the trapdoor toward 1.3500 and even 1.3420, levels last seen in September.

USD/CAD is stuck in a tug-of-war between two uncertain economies. Trump’s political bombs are weakening the dollar, while Canada’s tepid inflation dims loonie appeal. Until either Powell fights back or the BoC surprises, expect more sideways action around the 1.3700 handle.

For us traders, we have to keep our eyes on Powell's mic and the next CPI print. This range won’t last forever, something's gotta give.