On Wednesday, the USDCAD pair opened at 1.35984. The decline, which began last week, continued. A recent catalyst for the drop was US President Donald Trump's announcement of a trade deal with Japan. This news weakened the dollar as investors interpreted the agreement as a sign of easing trade tensions, reducing demand for the greenback as a safe haven.
Uncertainty in US-EU trade talks adds pressure on the dollar. The EU is considering broader countermeasures against the US as chances of reaching an acceptable deal diminish. The August 1 deadline for potential tariffs continues to weigh on markets. Investors are shifting funds into more stable currencies like the euro and yen, further pressuring the dollar.
Trump's actions toward the Federal Reserve (Fed) are increasing uncertainty. While Treasury Secretary Scott Bessent stated that Jerome Powell is not required to resign immediately, ongoing pressure on the central bank is eroding investor confidence. If markets begin doubting the Fed's independence, the dollar could weaken further.
The Canadian dollar is strengthening as recession risks fade. However, falling oil prices are limiting the loonie's gains. Canada is a major oil supplier, so lower oil prices negatively impact its currency. Still, increased US gasoline imports are partially offsetting the decline.
The MACD indicator shows the signal line below the MACD line, confirming a bearish trend. Additionally, the MACD value is negative, indicating weakening bullish momentum. However, the RSI is near 13, signaling oversold conditions and a potential correction.
Current recommendation:
Sell at the current price. Take profit — 1.3550. Stop loss — 1.3630. A short-term correction may occur due to oversold conditions, but the overall downtrend remains intact.
This content is for informational purposes only and is not intended to be investing advice.
