July 24, 2025

USDCAD open 1.3611, overnight range 1.3591-1.3614, close 1.3599

The USDCAD downside move stalled ahead of major support in the 1.3540-60 zone yesterday even as the other G-10 majors were grinding out gains. The downside is limited until the conclusion of the Canada/US trade talks. At the moment, Trump has declared a 35% tariff on Canadian imports effective August 1. Meanwhile, Prime Minister Mark Carney said he would not accept a trade deal at any cost, and his government has reportedly prepared retaliatory measures.

Canada retail sales fell 1.1% m/m in May as predicted while retail sales ex autos fell 0.2% m/m (forecast -0.3%, April -0.3%) The results were ignored.

US weekly jobless claims dipped by 4,000 compared to 217,000 last week and the 4-week average fell to 224,500 from 229,500. These results further reinforce the Fed’s decision to leave rates unchanged.

WTI oil traded in a 65.38-66.31 range supported by yesterday’s 3.169-million-barrel decline in US crude inventories as of last week. However, gains were capped by ongoing tariff uncertainty due to fears that the EU would impose retaliatory tariffs.

USDCAD Technical Outlook:

The intraday technicals flipped to bullish with the break of intraday downtrend line (hourly chart) at 1.3610, setting the stage for a revisit to resistance in the 1.3650 zone.  A move below 1.3590 negates the upside pressure and puts the focus on 1.3540.

The medium-term technicals are unchanged from yesterday.  They are bearish as price action has been dominated by a series of lower highs and lower lows since the mid-April peak near 1.3845, and the latest breakdown below support in the 1.3660–1.3610 zone has further reinforced the negative momentum. Rallies will be corrective if they fail to break above 1.3660.

For today, USDCAD support is 1.3590 and 1.3560. Resistance is 1.3640 and 1.3670. Today’s Range: 1.3580-1.3640

Tariffs, and Trump

President Trump’s latest barrage of rabid attacks on former presidents Biden and Obama—coupled with a flurry of tariff threats and trade deal theatrics—was a calculated effort to deflect attention from his long-standing relationship with his former friend and convicted pedophile, Jeffrey Epstein. That relationship was thrust back into the spotlight after both The Wall Street Journal and The New York Times reported that Trump’s name appeared repeatedly in the very Epstein files the White House had claimed did not exist.
Trump is also claiming that an EU/US trade deal is close and analysts are guessing that like Japan, the EU will face a baseline tariff rate of 15%. But just in case things go off the rails, EU officials are voting on €93 billion of counter-tariffs.
Trump also announced that he would not go below a tariff of 15% for any country, saying the range is 15-50%.

Taking Stock
Trade deal hopes boosted Wall Street to a record close and that optimism carried through to Asia. Japan’s Topix closed with a gain of 1.75% and Hong Kong’s Hang Seng index finished up 0.51%. Australia’s ASX was the outlier, closing with a 0.32% loss.
European bourses rose ahead of today’s ECB meeting led by a 1.00% gain in the UK FTSE100. The German DAX has risen 0.80% while the French CAC 40 index is up 0.17%. S&P 500 futures are up a modest 0.12%, the US 10-year Treasury yield ticked higher to 4.40% and gold (XAUUSD) extended yesterday’s slide and sits at 3316.34. The US dollar index (DXY) chopped about in a 97.14-97.41 range, as of 6:07 am EDT.

EURUSD
EURUSD is see-sawing inside a 1.1747-1.1780 range ahead of today’s ECB monetary policy meeting. The consensus is for policymakers to leave rates unchanged with vague guidance due to the ongoing US/EU trade talks. German Manufacturing PMI (actual 49.2 vs forecast 49.4, previous 49) was described as fragile but expanding. Eurozone PMI was 49.8 as expected but services PMI topped forecasts, coming in at 51.2 (forecast 50.8), which S&P Global said suggests that “the recession in the manufacturing sector is coming to an end.” Nevertheless, traders are awaiting news on the EU/US trade talks.

GBPUSD
GBPUSD traded negatively in a 1.3539-1.3589 range and is at the bottom in NY trading. Sentiment soured when UK PMI showed that the economy was struggling to expand. The UK Services PMI Business Activity Index was 51.2 (previous 52.8), which was partially offset with a rise in the Manufacturing PMI to 48.2 from 47.7.

USDJPY
USDJPY is consolidating its post-US/Japan trade deal losses in a 145.86-146.66 range with prices at the top in NY. The gains are due to higher US Treasury yields. A break above 146.80 targets 147.60. Manufacturing PMI was 48.2 compared to 50.1 in June.

AUDUSD
AUDUSD traded firmer in a 0.6597-0.6625 range with prices underpinned by improved risk sentiment following the US/Japan trade deal and hopes for a US/EU deal being announced soon. Prices were also bid after RBA Governor Michele Bullock advocated a “measured and gradual” approach to easing rates, which traders viewed as mildly hawkish.

NZDUSD
NZDUSD traded sideways in a 0.6042-0.6060 band as it consolidated Wednesdays gains due to improved risk sentiment.

USDMXN
USDMXN dropped sharply yesterday, falling from 18.6865 to close at 18.5409 which was the largest one-day percentage drop since July 3. Prices consolidated the losses in a 18.5297-18.5613 range overnight.  EU/US trade deal optimism offset concerns that Banxico will cut rates by 25 bps at the August meeting.

USDCNY
PBoC fix: 7.1385 vs exp. 7.1503 (Prev. 7.1414).
Shanghai Shenzhen 300 rose 0.71% to 4149.04

EU/China summit in Beijing mostly hot air. Xi Jinping warns that EU must “make the correct strategic choice,” while EU President Ursula von der Leydon said EU/China ties were at an inflection point. Earlier, this two-day summit was shortened to just one-day, evidence that both sides are far apart.

The president of the European Union Chamber of Commerce in China Jens Eskelund said that among the European population, the belief is that China is taking most of the spoils from bilateral trade, as the EU’s manufacturing sector struggles to compete with a glut of cheaper goods. He has a point the EU trade deficit with China is €305 billion.

FX High, Low, Open

Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau