USD/CAD Drops to 1.3600 as Trade Deal Optimism Weakens Safe-Haven Demand

USD/CAD Falls Toward 1.3600 as Trade Deal Optimism Builds

The USD/CAD pair is trading around 1.3600, a level not seen in nearly three weeks, during Thursday’s Asian session. The pair is facing bearish pressure as safe-haven demand for the US Dollar (USD) continues to weaken amid growing optimism that the United States and European Union may reach a tariff deal before the looming August 1 deadline.

Market Sentiment Shifts on Trade Deal Progress

Markets are increasingly confident that a US-EU agreement could echo this week’s US-Japan trade deal, which included a tariff reduction to 15% on car imports. This shift toward diplomatic resolution is pressuring the Greenback, allowing the Canadian Dollar (CAD) to recover ground.

Technical Outlook: Bearish Setup Strengthens

• USD/CAD is trading below the 20-day Exponential Moving Average (EMA), signaling a bearish trend in the short term.
• The US Dollar Index (DXY) hovers around 97.00, a two-week low, confirming broader USD weakness across major pairs.
• A further decline toward 1.3400 appears warranted if bearish momentum continues, especially if key data disappoints.

Data Ahead: PMI and Retail Sales in Focus

• Flash US S&P Global PMI (July) – Due at 13:45 GMT
• Canadian Retail Sales – Expected to provide insight into domestic consumption trends

These releases could drive short-term volatility in USD/CAD, especially if results deviate from market expectations.

Related on Tredu

• Live USD/CAD Price Chart & Technical Indicators
• How Tariff Deals Impact Forex Pairs
• DXY Analysis: What’s Driving Dollar Weakness?