The US dollar strengthened in volatile Asian trading on Tuesday after President Donald Trump hinted at imposing 25% tariffs on Canada and Mexico, driving a selloff in the Canadian dollar and Mexican peso.
The dollar gained 0.87% to 1.44346 against the Loonie (USDCAD) and 1.19% against the peso (USDMXN), as market participants reassessed trade risks and policy uncertainty.
The dollar index (USDX), which tracks the greenback against a basket of major currencies, rebounded 0.6% to 108.65, after suffering a sharp 1.2% decline in the previous session—the steepest drop since late 2023.
Picture: USDCAD surges after rebounding from key support, with bullish momentum pushing prices toward the 1.45155 resistance level, as seen on the VT Markets app
The 15-minute graph shows USDCAD experiencing a strong upward move, gaining 0.87% after a sharp rebound from the 1.42605 support level, reaching a session high of 1.45155.
The short-term 5-period MA (purple) and 10-period MA (yellow) have crossed above the 30-period MA (gold), signalling a bullish trend. A sustained move above 1.44350 could lead to a retest of the 1.45155 resistance, with potential for higher levels if bullish momentum persists.
Picture: USDMXN rebounds strongly, eyeing resistance at 20.80000 after bullish breakout from key support levels. Learn more on the VT Markets app
On the other hand, USDMXN gained 1.19%, recovering from a session low of 20.46024 and reaching a high of 20.79391 after bouncing off key support at 20.43885.
The MACD line (blue) is above the signal line (yellow), reflecting strong bullish momentum. A rejection at resistance may result in a pullback toward the 20.60000 support zone before the next bullish attempt.
The euro (EURUSD) dropped to $1.0364, down from an earlier high of $1.0434, reflecting concerns over potential spillover effects if Trump’s tariff policies extend to the European Union. The Japanese yen (USDJPY) also saw a modest retreat, with the dollar gaining 0.3% to 156.06, rebounding from a five-week low of 154.90, as traders shifted focus to the Bank of Japan’s upcoming policy decision.
Meanwhile, the offshore Chinese yuan (USDCNH) weakened, with the dollar rising 0.3% to 7.2847, as investors weighed the potential for further tariffs against China, given Trump’s prior threats of imposing up to 60% tariffs on Chinese goods.
Investors will closely watch for further policy announcements from the Trump administration, with the anticipated Feb. 1 tariff announcement potentially shaping the trajectory for USDCAD and USDMXN in the near term. Market participants should remain cautious, as further volatility is expected across FX markets.
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