USD/CAD Trims Losses Amid Trade Optimism, Capped Below 1.3735 Resistance

USD/CAD Trims Losses but Struggles Below 1.3735 as Trade Sentiment Lifts Loonie

Canadian Dollar Gains Support from Oil and Trade Progress

The USD/CAD pair continues to hover near the 1.3735 resistance, cutting earlier losses but unable to push higher as optimism over US-China trade talks and rising oil prices lend strength to the Canadian Dollar (CAD).

The Loonie remains within striking distance of its year-to-date high at 1.3640, despite facing pressure from a slightly stronger US Dollar (USD). Market sentiment remains cautiously optimistic as US and Chinese negotiators engage in a second day of trade discussions aimed at easing tensions and resolving core issues.

💹 Real-Time USD/CAD Chart & Key Support Levels

US Dollar Firms on Positive Trade Rhetoric

The US Dollar Index (DXY) shows a modest uptick following encouraging remarks from President Trump, who described the ongoing trade talks as constructive. Investors are hopeful for a rollback of tariffs and better cooperation on strategic sectors like rare earth exports, semiconductors, and education exchanges.

Oil Rally Underpins CAD Strength

The Canadian Dollar draws additional support from the uptrend in oil prices, a major export for Canada. Rising energy prices typically benefit the Loonie due to the nation’s commodity-sensitive economy. As oil holds steady above key technical levels, CAD finds buying interest despite broader USD strength.

📈 Check Latest WTI Crude Oil Technical Analysis

Outlook: USD/CAD Faces Resistance, Bias Tilted to Downside If Oil Gains Hold

While USD/CAD maintains a neutral tone, the pair remains capped below 1.3735, suggesting a lack of bullish momentum. A break below 1.3640 could open the door for a deeper pullback, especially if oil continues to rally or trade talks deliver a surprise breakthrough.

For now, traders await further developments in the trade negotiations and the upcoming US CPI report, which may guide the next directional move for the pair.