The Canadian Dollar is holding steady but has lost a bit of value against the US Dollar. Trade uncertainties, especially regarding the digital services tax (DST), are causing some negativity. However, there is hope for a trade agreement with the US by July 21st. Overall, market risk is looking positive, and commodity prices have improved after a recent dip linked to oil prices. Key factors affecting the Canadian Dollar include strong US interest rates, which make the US Dollar more attractive. Currently, the CAD is trading below its fair value estimate of 1.3561, suggesting a chance for moderate decline. There’s resistance at 1.3700/05 and support at 1.3590/1.3610. If the CAD drops, it could reach the 1.3400/20 range.

Market Sentiment And Trading Recommendations

The overall trend for the USD is downward, with increasing selling pressure, even if there are occasional intraday gains. Financial markets carry inherent risks, and it’s vital to do thorough research before making investment choices. This information is not a trading recommendation, and all risks lie with the individual. The author and source do not guarantee the accuracy or completeness of the information. Recently, the Canadian Dollar has been relatively stable but has edged down against the US Dollar. Trade uncertainty, particularly surrounding the DST, is holding back its strength. Yet, there’s cautious optimism about reaching a trade deal with the US by July 21st, a date to keep an eye on. Global risk appetite is improving, and commodity markets are recovering from earlier declines due to sharp oil price fluctuations. However, the loonie has not fully reflected this rebound. The strength of US interest rates continues to impact the market, as higher US yields attract global capital and make the greenback more appealing in trades, limiting CAD’s potential. Technically, USD/CAD is trading slightly below its estimated fair value of 1.3561. This gap suggests a possible gradual downside for CAD short-term, especially if resistance at 1.3700/05 stays strong. If CAD tests support at 1.3590 to 1.3610, it may slip closer to 1.3400 to 1.3420.

Derivatives And Trading Strategies

For those using derivatives, this market situation offers multiple entry points based on confidence and timeframes. The resistance levels may encourage short-term positions around 1.3700, particularly if macroeconomic trends favor stronger US yields or global sentiment weakens. However, if risk aversion decreases and Canada gets closer to a trade deal with the US, support levels might stabilize, potentially allowing a re-entry around the 1.35 mark for medium-term investments. Internationally, the overall trend for the US Dollar is clearly downward. Despite the occasional short-term gains usually driven by economic data or sudden shifts in risk, sellers seem to dominate the market. This broader trend significantly affects cross-pairs and should not be overlooked. Traders managing short gamma positions or considering volatility might find the pressure on the dollar impacts assumptions and implied volatility, especially in relation to the Federal Reserve’s rate expectations for the upcoming quarter. As always, outcomes in financial markets are uncertain. Risk is always present and requires careful consideration. Each trading position should be based on solid data and thorough review. Create your live VT Markets account and start trading now.

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