USD/CAD drops below 1.3700 on potential Canada-US trade deal prospects

USD/CAD declined below the 1.3700 support level as markets price in the possibility of a new trade agreement between Canada and the United States this week. The Canadian dollar strengthened against its US counterpart amid optimism that bilateral trade negotiations could yield positive results, reducing uncertainty for cross-border commerce. The move represents a significant break of technical support, with the pair now testing levels not seen in recent sessions. Trade deal prospects are bolstering CAD sentiment as investors anticipate reduced tariff risks and improved economic cooperation between the neighboring countries. The 1.3700 level now acts as resistance, with further downside potential toward 1.3650 if trade talks progress favorably. Traders should closely monitor official announcements regarding trade negotiations, as any concrete agreement could trigger additional Canadian dollar strength. Market positioning suggests continued USD/CAD weakness barring any negative surprises in negotiations.