Canadian Dollar Weakens as Investors Turn Defensive- What Traders Should Aim for Now?

ByRichard Dawson
Ultra-Compact Summary Section

Summary

  • CAD slips as markets move into “risk-off” mode
  • USDCAD market price slips lower to 1.3660
  • US trade policy and market sentiment pushed the USD higher
  • USTraders await Canada’s annualized GDP growth rate data and the US PPI reports on Friday

The Canadian Dollar (CAD) weakened as investors rotated into the US Dollar (USD) amid growing uncertainty over US trade policy, pushing USDCAD higher.

Attention now shifts to Canada’s Annualized GDP, a key indicator for the Bank of Canada’s policy outlook, which could either support the Loonie(USDCAD) or extend its downside momentum.

Why Is the Canadian Dollar Falling Today?

Investors’ Flight to Safety: When investors feel uncertain, they move capital into safer currencies like the US Dollar. This pressurizes the commodity-linked currencies, like the  CAD.

US Tariff Concerns: Ongoing uncertainty around US tariff changes continues to dampen investor appetite for risk-sensitive assets, so the Canadian Dollar price falls.

Oil Price Sensitivity: Canada is a major oil exporter. So, Canada’s currency remains highly correlated with crude oil price movement.

Canadian GDP (Annualized): It is now a major price driver for CAD. Gross Domestic Product (GDP) measures the total value of goods and services produced in Canada. Volatility may spike around the GDP release.

The Loonie (USDCAD) Market Overview

Support Level: 1.3650
Resistance Zone: 1.3720–1.3750
Indicators: RSI shows mild bullish divergence on the 4H chart
Trend Bias: Short-term bullish while price holds above 1.3650

Momentum indicators suggest buyers are gaining control in the short term. However, volatility may spike around the GDP release.

“GDP won’t be great but the (rate) cuts are working their way through to the system.”- said Paul Button, manager of Central bank of Canada.

What Traders Should Do Now?

Short-term traders may find opportunities in volatility expansion, while swing traders should wait for confirmation beyond key technical levels.

Short-Term Traders:

  • Look for breakout confirmation above 1.3720
  • Apply volatility- based trading strategies during the GDP news event
  • Use tight risk management due to high-impact event risk
  • Avoid overleveraging ahead of high-impact data.

Swing Traders:

  • Breakout strategies can be considered around 1.3720 or 1.3650 levels.
  • Observe Bank of Canada rate expectations
  • Track the US Dollar Index (DXY) indicator for broader trend confirmation

Risk Warning:
High-impact economic data releases about GDP can cause sharp price swings. Avoid overleveraging before major releases.

Disclaimer: All information on this page is for educational purposes only and should not be considered financial advice or a recommendation to trade or invest. Readers should conduct their own research before making any financial decisions. SureShotFX and authors do not guarantee accuracy, completeness, or timeliness of these news updates and are not responsible for any losses or damages incurred.
About our author
Richard Dawson
Richard Dawson

Richard Dawson is an experienced market analyst and financial writer with nearly a decade of expertise in Forex, Crypto, and Gold trading. He specializes in VPS technologies, broker research, and copy trading systems. At SureShotFX, Richard writes blogs, educational guides, and research content that help traders make confident decisions.