USD/CAD Price Forecast: Continues to face pressure above 1.3950

USD/CAD surrenders some of its intraday gains even though the USD Index holds gains around 105.90.

Trump promised to raise import tariffs by 10% and lower taxes.

The Fed is expected to cut interest rates by 25 bps while the BoC is estimated to reduce them by 50 bps in December.

The USD/CAD pair gives up half of its intraday gains after facing selling pressure above the key resistance of 1.3950 in the North American session on Tuesday. The Loonie pair surrenders some gains even though the US Dollar (USD) clings to an intraday high, suggesting that the Canadian Dollar (CAD) gains some strength.

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, jumps to near 105.90, the highest level seen in more than four months. The USD Index strengthens on improved United States (US) economic and inflation outlook, given that President-elected Donald Trump vowed to raise import tariffs and lower corporate taxes in his election campaign, which will emphasize the need for the Federal Reserve (Fed) to favor a more gradual policy-easing stance.

Currently, the Fed is expected to cut interest rates by 25 basis points (bps) to 4.25%-4.50% in the December meeting, according to the CME FedWatch tool. Going forward, investors will focus on the US Consumer Price Index (CPI) data for October, which will be published on Wednesday.