Trump's tariff threat drives USD/CAD to highest level since 2020

The Canadian dollar fell sharply after former President Trump threatened a 25% tariff on Canada and Mexico. The USD/CAD exchange rate briefly rose above 1.4100, reaching a high of 1.4177, the highest level since 2020. This increase in the exchange rate highlights the significance of the 1.4100 mark, which has historically been a resistance level. Previous monthly closes have struggled to maintain levels above this point, indicating its importance for traders. The Bank of Canada is expected to cut interest rates more quickly, creating a divergence with U.S. inflation concerns due to the proposed tariffs. This situation poses challenges for the Canadian economy amid changing market dynamics.