The USDCAD surged briefly on early Friday following President Trump’s formal letter to Canadian Prime Minister Mark Carney, announcing a 35% tariff on Canadian imports effective August 1. The move cited national security concerns over fentanyl smuggling and a persistent trade deficit. While the announcement initially sparked bullish momentum, the rally failed to hold as price action quickly reversed.

Nevertheless, the initial move higher on Friday on the tariffs, took the price above a swing level from Wednesday and Thursday at 1.3710, and also through the 38.2% of the move down from the May high at 1.37208, but momentum slowed and failed. Buyers had their shot and they missed.

After falling back below the 1.3710, the pair moved up toward 1.3710 in the NA session off the volatility from the jobs report which was stronger than expected (but most was temporary workers), matching the week’s earlier highs, but could not break through (see green numbered circle on the chart above).

Sellers leaned into resistance, and price rotated back down toward the 100-hour moving average (currently around 1.3682), which has been acting as a pivot point amid choppy, rangebound trading since Wednesday. The 200-hour MA is also rising and approaching the 1.3649-1.3651 support zone, a level where the pair found solid footing on Wednesday, Thursday, and Friday last week paren see red numbered circles on the chart above).

The failure to sustain the tariff-inspired breakout suggests hesitation among traders, likely due to exemptions under USMCA. Until the pair can clearly break above 1.3710 and 38.2% retracement at 1.37208, or below 1.3649 (short-term 4 from last week and 200 hour moving average), expect continued two-way trading, with the moving averages acting as key technical guides.