USD/CAD Slides Below 1.3700 as Markets Await Progress in US-China Trade Talks

USD/CAD Slides Below 1.3700 as Markets Await Progress in US-China Trade Talks

The USD/CAD currency pair drifted lower on Monday, trading below the 1.3700 level in early European hours. Market sentiment turned cautiously optimistic as investors await the next round of US-China trade talks, scheduled to take place in London later in the day.

Trade Talks Steal the Spotlight

Traders are hopeful that US and Chinese negotiators can build on last month’s Geneva progress, where both sides agreed to roll back some of the tariffs that had heightened global trade tensions. Renewed talks are expected to restore confidence in international markets, with risk appetite improving modestly.

US and Canadian Jobs Data Create Mixed Signals

On Friday, the US Nonfarm Payrolls (NFP) report once again highlighted a resilient labor market, showing job growth of 139,000, surpassing expectations. While the upbeat data supports the Federal Reserve’s decision to maintain interest rates, the US Dollar (USD) is facing mild selling pressure ahead of the talks.

In contrast, Canada's jobs data released on Friday showed mixed results, with the unemployment rate climbing to post-pandemic highs, clouding the outlook for the Canadian Dollar (CAD) despite stable payroll figures.

Market Sentiment and Technical Overview

Despite Friday's bullish USD momentum, traders are now more cautious as the trade talks unfold. The USD/CAD pair has trimmed earlier gains and could see further pullback if trade negotiations produce positive headlines.

From a technical perspective, support is seen near 1.3640, while resistance remains at 1.3740, the level where Friday's rally peaked. The pair remains within a consolidation range, and directional clarity may emerge after the trade meeting's outcomes are public.

Related Tredu Reads:

• What’s Next for the US Dollar After Jobs Data?
• Canada’s Labor Market Struggles to Gain Momentum
• US-China Trade: How Talks Could Shape the Market

Conclusion

The USD/CAD pair is pulling back as traders adopt a wait-and-see approach ahead of the US-China trade negotiations. Although the US labor market remains strong, investor focus has shifted to geopolitical progress, which may determine the next major move in the pair.