July 28, 2025

USDCAD open 1.3726, overnight range 1.3689-1.3742, close 1.3702

USDCAD rallied on the back of widespread US dollar strength following the news of the EU/US trade deal.  One of the reasons for the greenback’s rally is that the EU/US trade deal is very-one sided.

USDCAD is also underpinned ahead of the Trump-imposed August 1 trade deal deadline, when the President threatened to hike tariffs on non-USMCA covered products to 35%. Prime Minister Carney said that Canada will not sign a “bad -deal”  but if he follows the EU lead, an already weak Canadian economy will be much weaker, raising the odds for a recession before year end.

WTI oil traded with a modest bid in a 65.10-65.96 range with prices supported by the EU/US trade news. Traders are hoping that the removal of tariff uncertainty will reiginite crude demand.

There are no notable US or Canadian economic reports today.

USDCAD Technical Outlook:

The intraday technicals are bullish and looking for a decisive move above 1.3760 to target 1.3825. Failure to break above 1.3760 suggests choppy 1.3680-1.3760 trading today.

Longer term, the USDCAD downtrend from March remains intact while prices are below 1.3820 and targeting 1.3560. A topside break targets 1.3950.

For today, USDCAD support is 1.3680 and 1.3650. Resistance is 1.3740 and 1.3770. Today’s Range: 1.3680-1.3750

EU Caves to Trump

President Trump walloped EU President Ursula von der Leyen with his trade tariff cudgel, and she quickly caved. According to Trump, Ms. Leyen agreed to a 15% US levy on EU imports, excluding aircraft and components, semiconductor equipment, and generic drugs. The EU also accepted Trump’s existing 50% tariff on EU steel and aluminum. In return, the EU promised $600 billion in US investments and $750 billion in US energy purchases. What does the EU get? Nothing.

Big Week Ahead

It could be a volatile week as thinner-than-usual liquidity collides with the FOMC meeting, key economic data—including nonfarm payrolls and the PCE index—and major earnings reports from Microsoft and Meta on Wednesday, followed by Apple and Amazon on Thursday.

Taking Stock

Wall Street closed higher on Friday, and S&P 500 futures are up 0.27% this morning, pointing to another upbeat open. Asian markets were mixed: Australia’s ASX 200 rose 0.36%, Japan’s Topix slipped 0.72%, and Chinese equities advanced on optimism around a potential China-US trade deal, with Hong Kong’s Hang Seng gaining 0.68%.

European bourses rallied on the EU/US trade news. France’s CAC-40 led the charge with a 0.70% gain. Germany’s DAX rose 0.37%, and the UK’s FTSE 100 edged up 0.10%. Gold (XAUUSD) slipped from 3345.41 to 3323.98 and is trading at 3337.50 as of 6:00 am EDT. The US 10-year Treasury yield is 4.375%. The US dollar index (DXY) surged from 97.53 to 98.22 on the trade headlines.

EURUSD

EURUSD plunged to 1.1658 from 1.1771 and is hovering near 1.1671 in NY. The drop came as traders digested the lopsided trade deal, heavily skewed in America’s favor. The best spin EU President von der Leyen could muster was that it “brings certainty and stability for business.” A break below 1.1610 could target 1.1450.

GBPUSD

GBPUSD extended Friday’s losses, sliding to 1.3407 from 1.3453. The pair remains under pressure on rising odds of one or two more Bank of England rate cuts. Some support is coming from chatter that Prime Minister Starmer will meet Trump to finalize a UK/US trade deal, reportedly more favorable than the EU’s. Meanwhile, Bridgewater’s Ray Dalio warned the UK is stuck in a “doom loop” of higher taxes, slower growth, and rising debt.

USDJPY

USDJPY climbed from 147.52 to 148.53, lifted by broad US dollar strength and political fallout from Japan’s Upper House election, where PM Shigeru Ishiba lost his governing majority. The BoJ is expected to hold rates steady Thursday, but the statement could sound hawkish in light of the new US/Japan tariff pact.

AUDUSD

AUDUSD traded defensively in a 0.6516–0.6586 range, pressured by the stronger US dollar after the EU/US deal. Losses were limited by reports that Trump will extend the China tariff pause by 90 days as talks continue in Sweden.

USDMXN

USDMXN rose from 18.5109 to 18.6318, lifted by post-trade deal US dollar strength. Markets are downplaying Trump’s August 1 tariff deadline, as most Mexico/US trade flows under the USMCA framework.

USDCNY

PBoC fix: 7.1467 vs. exp. 7.1653 (Prev. 7.1419)
Shanghai Shenzhen 300 rose 0.21% to 4135.82
The US and China are reportedly planning to extend their tariff truce by 90 days. Talks are underway today in Sweden.

FX High, Low, Open

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