2026 has begun at breakneck speed for financial markets. Between strong speeches at the World Economic Forum, the US returning to a Monroe Policy, and geopolitical threats from Trump, traders have a lot to cover and more to await. USD/CAD will be in the spotlight this week as traders await a key FOMC and Bank of Canada combo.
The tensions between the US and Canada, which started last year with the Trump Administration’s threat to invade Canada and call it the 51st state, have recently escalated.
The relationship has been inconsistent since the start of Trump’s second term, with Canadian trade teams struggling against challenging US demands.
While the USMCA extension was granted early this year — a crucial agreement for North American firms that would be too economically damaging to penalize (it's reviewed biannually) — Canada is now seeking to reduce its over-reliance on the US.
Canada recently finalized historic deals with China, simplifying trade and dropping significant tariffs (a process begun in 2018). This has angered Trump, who is threatening to impose 100% tariffs on Canadian goods if Carney signs a free trade deal.1
This recent volatile rhetoric from the US president has significantly weakened the US dollar, ending January 2026 on a sour note, despite a decent start.
USD/CAD is approaching its December 2026 lows ahead of key rate decisions from the Bank of Canada and the FOMC, both scheduled for January 28.
Uncertainty looms for traders ahead of these central bank meetings. Given the volatile macroeconomic and geopolitical environment, close attention to headlines — and especially to Powell's and Macklem's announcements at their press conferences — is essential.
USD/CAD 4H chart, January 26, 2026. Source: TradingView. Past performance is not indicative of future results.
Resistance levels
- 1.38 (+/- 100 pips) key momentum pivot
- Major resistance 1.3870 to 1.39
- 1.3930 past week highs
- 1.40 to 1.4050 psychological resistance
Support levels
- Major support zone 1.3650 to 1.37
- December 26 lows 1.36430
- 2025 support zone 1.3560 to 1.36
- 1.3540 2025 lows
This article is for general information purposes only, not to be considered a recommendation or financial advice. Past performance is not indicative of future results. It is not investment advice or a solution to buy or sell instruments.
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