The USD/CAD pair has risen to about 1.3755, marking its fourth straight day of gains. The Canadian Dollar, or Loonie, gained value because the US Dollar has strengthened after a tariff deal between the US and the EU over the weekend. The US Dollar Index is now close to 99.00, its highest level in a month. This increase comes after the US-EU deal, which resulted in milder tariffs than expected and boosted the US Dollar. Traders are waiting for the Federal Reserve and the Bank of Canada to announce their monetary policies on Wednesday. Both banks are expected to keep their interest rates the same. Today’s main focus is on the US JOLTS Job Openings data for June, which is predicted to show 7.55 million job openings, down from 7.77 million in May. This information is important for understanding the job market in the US. The Bank of Canada makes interest rate announcements up to eight times a year, which can impact foreign investment in Canada. The next announcement is set for July 30, 2025, with an expected rate of 2.75%, unchanged from before. With the USD/CAD rate nearing 1.3755, we see continued strength in the US Dollar. This comes after a weekend agreement between the US and the EU, which prevented the most severe tariffs. The US Dollar Index has risen to around 99.00, reflecting its highest level in a month. Both the Federal Reserve and the Bank of Canada are ready to make monetary policy announcements this Wednesday, with most expecting both to keep rates steady. However, recent data shows a difference in economic health that might favor the US Dollar. US core inflation remains above 3%, while Canada’s inflation has eased to 2.6%. Today’s spotlight is on the US JOLTS Job Openings report. It is expected to show a slight decline in the job market, with projections of around 7.55 million openings. This still indicates a strong job market compared to before 2021. In contrast, Canada’s economy appears to be slowing, with lower growth reported for Q2. Given this positive momentum and strong economic data, we think traders should consider betting on further gains in this currency pair. Buying August or September call options with a strike price around 1.3800 could be a smart strategy to take advantage of potential upward movement. This method allows traders to benefit from increases while capping their maximum risk. The main risk lies in any surprises from the central banks during their meetings this week. A surprising change in tone from the Bank of Canada or an unexpected message from the Federal Reserve could quickly shift the current trend. Historically, the 1.3800-1.3850 range has been strong resistance for this pair over the last two years. If the rate moves decisively above this historical resistance following the policy announcements, it could spark new buying activity. Such a breakout might lead the exchange rate toward the 1.3900 level in the coming weeks. We will pay close attention to the central banks’ messages for any shifts in their tone.

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