USDCAD fell due to weaker-than-expected U.S. jobs data, including downward revisions of previous months. This reversed a trend initiated by a U.S. announcement of a 35% tariff on Canadian imports, which had previously weakened the CAD.
Prior to the jobs report, USDCAD reached its highest point since May 22 at 1.3879. However, disappointing data led the pair to slip below the 100-day moving average of 1.3818. A failure to test the 38.2% retracement at 1.3923 further exacerbated selling momentum.
Impacts Of Recent Trends
The downward move returned the pair to its earlier range until this week’s breakout. Once in the swing area of 1.3749–1.3760, buyer interest resumed, with the day’s low at 1.3762 before a modest rebound to around 1.3786. Retaking and maintaining above 1.3797 would reaffirm buyer activity.
Despite technical setbacks, Canadian tariff concerns may temper further CAD gains, yet could also impact the U.S. economy. This dual pressure suggests a careful watch on technical indicators for trading strategies.
Based on the events of today, August 1, 2025, we are caught between two powerful and opposing forces affecting the USDCAD. The disappointing US jobs report, which showed the economy added only 145,000 jobs in July against an expected 210,000, has put significant pressure on the US dollar. This unexpected weakness suggests the Federal Reserve may be forced to pause its rate-hiking cycle, a view that is weighing on the greenback.
Current Market Conditions
On the other hand, the Canadian dollar is facing its own major headwind from the newly announced 35% US tariff on key Canadian imports. This protectionist measure creates serious uncertainty for Canada’s export-driven economy and is the primary reason the USDCAD rallied so hard earlier this week. Historically, during the trade disputes of 2018 and 2019, such uncertainty caused prolonged periods of choppy price action until a clearer policy path emerged.
This conflict suggests that the USDCAD may remain range-bound in the coming weeks, making it a challenging environment for directional bets. For derivative traders, this could be an opportunity to sell volatility by using strategies like short straddles or iron condors. The market seems to be defining a range with firm resistance near the 1.3923 level and support holding around the 1.3750 area.
We’re also seeing some support for the Canadian dollar from other areas, which could help enforce this trading range. The price of Western Canadian Select (WCS) oil, a key Canadian export, has remained relatively stable, hovering around $78 per barrel. This stability can provide a floor for the loonie, counteracting some of the weakness caused by the tariff news.
Given the sharp rejection from the week’s highs, bearish strategies could be favored if the price fails to reclaim key technical levels. Traders might consider buying put options or establishing bear put spreads with strikes below the 1.3750 support area, anticipating a further slide if US dollar weakness continues to dominate. Conversely, a push back above the 1.3818 moving average would signal that the tariff concerns are overriding the jobs data, potentially warranting bullish option structures.
