USD/CAD Soars on Tariff Threats, BoC Rate Cut Risk Looms

USD/CAD has surged to multi-year highs near 1.4350, gaining 2.8% over the past week as Trump's tariff threats and diverging monetary policies weigh heavily on the Canadian dollar. The threat of 25% tariffs on Canadian exports has intensified selling pressure, while the Bank of Canada's dovish stance contrasts sharply with the Federal Reserve's hawkish pause. Canada's economic vulnerability is evident with GDP growth slowing to 1.2% and inflation falling below the 2% target. Market participants are pricing in a 70% probability of a BoC rate cut at the next meeting, which could push USD/CAD toward the 1.4500 psychological level. Technical indicators show the pair breaking above the 1.4300 resistance with strong momentum. The combination of trade tensions, monetary policy divergence, and weak Canadian fundamentals suggests continued CAD weakness ahead, with immediate support at 1.4250.