USDCAD dropped after the U.S. jobs report came in weaker than expected. This report included downward revisions for previous months. Earlier, the CAD had weakened due to a U.S. announcement of a 35% tariff on Canadian imports. Before the jobs report, USDCAD hit 1.3879, its highest level since May 22. However, disappointing data caused it to fall below the 100-day moving average of 1.3818. It couldn’t test the 38.2% retracement level at 1.3923, which added to the selling pressure.

Impacts of Recent Trends

This decline brought USDCAD back into its earlier trading range, which had broken out earlier this week. Once it reached the 1.3749–1.3760 area, buyers returned, with the day’s low at 1.3762. A small rebound followed, bringing it back to about 1.3786. To confirm buyer interest, it needs to hold above 1.3797. Despite these setbacks, worries about Canadian tariffs might limit further gains for the CAD, yet they could also affect the U.S. economy. Traders should carefully monitor technical indicators as they strategize their trades. As of August 1, 2025, we find ourselves between two opposing forces impacting USDCAD. The disappointing U.S. jobs report showed only 145,000 jobs added in July instead of the expected 210,000. This puts pressure on the U.S. dollar and suggests that the Federal Reserve may need to pause raising interest rates, which is affecting the greenback.

Current Market Conditions

Meanwhile, the Canadian dollar faces challenges from the new U.S. tariff on key Canadian imports. This protectionist move adds uncertainty to Canada’s export-driven economy and is a key reason for USDCAD’s earlier rally this week. In past trade disputes from 2018 and 2019, such uncertainty led to volatile price movements until a clearer policy emerged. Because of this situation, USDCAD might remain range-bound in the upcoming weeks, creating a difficult trading environment for directional bets. For those in derivatives, this may be a chance to sell volatility by employing strategies like short straddles or iron condors. Currently, the market appears to be defining its range, with strong resistance at the 1.3923 level and support around 1.3750. Support for the Canadian dollar is also coming from other sources. The price of Western Canadian Select oil, a key Canadian export, has been stable at around $78 per barrel. This stability could help the loonie resist some of the pressure from the tariff news. Given the rejection from this week’s highs, traders may prefer bearish strategies if the price fails to reclaim important technical levels. They might consider buying put options or setting up bear put spreads with strikes below 1.3750, expecting further declines if the U.S. dollar continues to weaken. However, if the price moves back above the 1.3818 moving average, it could indicate that tariff concerns are outweighing the jobs data, which may call for bullish option strategies. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now