USD/CAD gives up majority of intraday gains, outlook remains firm on Trump's tariff threats

• USD/CAD is still 0.35% higher after falling from the intraday high amid fears of Trump's tariff threats.
• The Canadian economy is expected to be biggest casualty of Trump's decision to impose 25% tariffs on steel and aluminum from all nations.
• Investors await the Fed Powell's testimony for fresh interest rate outlook.

The USD/CAD pair surrenders a majority of intraday gains and falls back to near 1.4340 from the intraday high of 1.4380, but is still 0.35% higher in Monday's North American session. The outlook of the Loonie pair remains firm on widening troubles for the Canadian Dollar (CAD).

Over the weekend, United States (US) President Donald Trump said that he will impose 25% tariffs on imports of steel and aluminum from all nations and reciprocal tariffs over those nations where he finds unfair trade practices. The scenario of tariff imposition on the above-mentioned metals is unfavorable for the Canadian Dollar, given that Canada is the leading exporter of aluminum to the US.

The impact of Trump's tariffs on metals will also come on trading partners, such as Brazil, Vietnam, Mexico and South Korea.

Last week, the Canadian Dollar attempted to gain ground after President Trump postponed 25% tariffs on all imports from Canada and Mexico after they agrees to cooperate on crime enforcement at borders. Also, surprisingly upbeat Canadian employment data for January offered support to the domestic currency.

Meanwhile, the US Dollar (USD) rises as renewed Trump's tariff threats have increased its safe-haven appeal. The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades 0.2% higher around 108.30.

The next trigger for the US Dollar will be the Fed Chair Jerome Powell's testimony before the Congress on Tuesday and Wednesday. Investors will pay close attention to Powell's commentary on potential Trump tariffs and their impact on inflation and the monetary policy outlook.