USDCAD slips after rally as renewed US-Canada talks resume

Talks between the US and Canada appear to have resumed in the latest episode of “TACO” Trump trade drama. During a Friday news conference, Trump announced he was stepping away from negotiations with Canada.

In response, the Land of Maple Syrup dropped its plans to implement a Digital Services Tax—one that would have directly impacted many American service-exporting firms.

The proposed tax now appears to have been more of a negotiation tactic from Canada aimed at its increasingly unpredictable neighbor.

Markets initially reacted sharply to Trump’s announcement on Truth Social, sparking a 900-pip rally.

However, the move quickly faded as participants recognized a familiar pattern—these announcements often act as leverage for the US to push for more favorable trade terms.

Read More: Seasonal flows for the month of July

USDCAD has largely given up its attempt of a bullish impulse – The 1.3760 highs after the Friday headline were not enough to bring back aggressive buying into the pair.

Prices have formed lower highs since past Monday's highs with this morning's session descent having stopped at 1.3620, last Thursday's lows.

Sellers will have to push below this level acting as immediate support , however may find some strength with the 4H MA 20 acting as immediate resistance – A break may hint at a retest of 1.3540 June 16th lows.

A fail to break below hints at a consolidation range to review higher levels, with the immediate main level upwards being the 1.3740 Pivot zone turned Resistance.

It is Victoria Day in Canada tomorrow, so Loonie traders may expect lower volumes that the usual in the pair.

The latest move in the currency pair has formed an Hourly Descending Channel (HDC) which may be used as a guide for momentum identification.

Any break below current levels will accelerate bearish strength to retest last week lows, with a further falloff finding potential support at 1.35 (Psycholigical Level + Upper bound of May Daily descending channel)

Holding above last week lows points at the upper bound of the HDC around 1.3680 in the Pivot Zone seen in the 4H Chart.

Watch for lower volumes in this week (except for Thursday with the NFP release) and for more headlines regarding US-Canada trade talks.

Safe Trades!