Border tariffs are set to return next Tuesday, although their duration remains uncertain. Increased punitive tariffs pose risks, but reactions in the foreign exchange market have been relatively muted compared to earlier in the year.

The Canadian economy may face considerable costs, while the US could see higher prices affecting sectors like the automotive industry. Recent movements show the USD advancing to the low 1.44 range, with some minor recovery for the CAD evident in early trading.

Current support for CAD stands at 1.4350/75, while resistance is noted at 1.4465/75. Overall, the USD maintains bullish momentum that may restrict significant CAD gains for the time being.

With border tariffs making their return next Tuesday, the focus shifts to how businesses will adapt. Costs are expected to weigh on the Canadian side, while American buyers could see inflated prices, particularly in the automotive sector. Although these measures bring uncertainty, the market reaction has been relatively restrained, especially when compared to the volatility seen earlier this year.

The US dollar has moved up into the low 1.44 range, reflecting the ongoing pressure on the Canadian dollar. In early trading, there has been a slight recovery for Canada’s currency, though whether this can be sustained is another matter. Support levels remain around 1.4350 to 1.4375, while resistance sits near 1.4465 to 1.4475.

For those of us watching these moves closely, the momentum still tilts in favour of further gains for the dollar, which could make it tough for the Canadian dollar to hold any rallies for now. Those trading in derivatives should be mindful of how these technical levels and tariff decisions interact, as this will shape expectations in the coming weeks. A sharp break above resistance would suggest markets have adjusted to tariff risks without much hesitation, while a test of lower support levels could indicate traders are more concerned than they appear.

It is also worth considering how inflation pressures play into this. A rise in costs could push interest rate discussions in an unfavourable direction, affecting both currencies. If pricing pressures accelerate beyond current forecasts, it may force quicker adjustments than currently expected. At the same time, if tariffs cut into consumer demand, we might see a different reaction altogether.

The coming period will provide a clearer picture of how adaptable the market remains. These price points and broader sentiment shifts form the basis of what could be a critical phase, particularly for those navigating volatility in the derivatives space. The fundamental picture remains in flux, meaning awareness of emerging shifts will be key.