March 2, 2026

USDCAD open: 1.3853, overnight range 1.3845-1.3871, close 1.3861

USDCAD traded sideways overnight but remains supported by risk aversion. The US dollar is bid across the board as traders fear that Trump will escalate his Iran war by putting troops on the ground as early as this weekend, using his promise to delay attacks on energy infrastructure as a distraction.

USDCAD is also supported by widening Canada/US 10-year interest rate spreads which have widened to -90.4 from -79.8 on Tuesday.

Yesterday, Bank of Canada Deputy Governor Carolyn Rogers suggested that Canadian interest rates are likely to stay higher for longer as it navigates structural economic shifts and persistent uncertainty. With inflation expectations still anchored but vulnerable, policymakers appear reluctant to cut rates quickly and remain prepared to tighten if energy-driven inflation broadens.

WTI oil traded higher, rising from 92.14 to 97.24 due to fears the US war on Iran will escalate over the weekend. Even worse, there is talk that if the US bombs Iranian energy infrastructure, the Iranian-sponsored Yemeni Houthi’s would renew attacks in the Red Sea, particularly the Bab-el-Mandeb Strait. If so, it would impact another 10% of the world’s oil.

The Michigan Consumer Sentiment report is expected to be unchanged but the results will take a back seat to concerns about the US-Iran war.

USDCAD Technical Outlook

The intraday USDCAD technicals are bullish above 1.3830 and looking for a break above 1.3870 to target 1.3890. The momentum indicators remain elevated but have eased from extreme overbought. A move below 1.3830 targets 1.3790.

The medium-term USDCAD technicals are bullish above 1.3720 with prices snapping the weekly downtrend line that has guided prices lower since mid-November. Daily RSI near 80 and stretched Bollinger Bands suggest upside is vulnerable to a pullback. A break above 1.3900 opens 1.4000, while failure keeps the 1.3550–1.3900 range intact.

For today, USDCAD support is at 1.3820 and 1.3780. Resistance is at 1.3870 and 1.3910.

Todays range 1.3790-1.3890.

FX Heat Map (6:00 am) one week

FX  open high low 6:00 am

War and More War

Trump says that anyone claiming that he is not talking with Iranian officials to secure an end to the war he started, is fake news. In fact, the Iranian talks are going so well, he extended his deadline halting the bombing of Iranian energy infrastructure until 8:00 pm EDT, April 6.

German Foreign Minister Johan Wadenphul is annoyed a Trump’s demands for Europe to support the US war in Iran. He said “At this point, the legal requirements for us for such an operation aren’t met. And there is no specific request for us to take action at this time.”

For its part, Iran is putting its missiles where its mouth is. The IRGC has continued with drone and missile strikes on Kuwait, Saudi Arabia, and Israel.

The US dollar index (DXY) is trading near the top of its 99.80-100.05 range partly because traders prefer to remain long US dollars in case, Trump’s deadline is a ruse and the American’s escalate by landing troops.

Taking Stock

Asian equity indices closed mostly higher. Japan’s Topix rose 0.19%, the Hong Kong Hang Seng climbed 0.38%, while Australia’s ASX fell 0.11%.

As of 5:13 am PT, European bourses are lower. The German DAX has lost 1.50%, the French CAC 40 is down 0.43%, and the UK FTSE 100 is down 0.48%. S&P 500 futures have lost 0.38%, the 10-year Treasury yield is 4.469%, the DXY is 100.11, and Gold (XAUUSD) is 4429.51.

EURUSD

EURUSD traded negatively in a 1.1511-1.1547 range due to caution heading into the weekend amid the war in Iran. The IRGC continue to attack Gulf nations, and the latest attacks boosted oil prices. The lack of actionable Eurozone data leaves EURUSD direction to be determined by global risk sentiment.

GBPUSD

GBPUSD is under pressure in a 1.3282-1.3348 range. Rising oil prices, soft retail sales numbers, and declining GfK consumer confidence, combined with elevated risk aversion, weighed on the currency.

USDJPY

USDJPY is slightly bid in a 159.46-159.98 range, with gains fueled by rising US Treasury yields and higher oil prices. The 10-year Treasury yield rose to 4.467% from 4.1% overnight and was 4.30% at the beginning of the week. Gains were capped by the ever-present threat of intervention.

AUDUSD

AUDUSD is consolidating recent losses in a 0.6872-0.6913 range. The currency pair was pressured by general risk aversion selling due to caution ahead of the weekend.

USDMXN

USDMXN is firmer, trading in a 17.8839-18.0593 range as it consolidates yesterday’s post-Banxico meeting gains. The Mexican central bank surprised at least half of the market when it opted to trim rates by 25 bps to 6.75%. The vote was not unanimous, but the decision was made because of downside risks to growth from Trump’s Iran war. Policymakers expect inflation to hit its 3.0% target by Q1 2027.

China

USDCNY Fix: 6.9141 vs exp. 6.9089 (Prev. 6.9056)
Shanghai Shenzhen CSI 300 rose 0.56% to 4.4502.57

China Commerce Minister Wang Wentao and US Trade Representative Jameson Greer met to discuss China-US trade relations. The Ministry of Commerce (MOFCOM) said that the Americans should handle the relationship between competition and cooperation properly and maintain close communications.

China opens up two investigations into US trade practices, which is retaliation against similar investigations into China by the Trump administration. The first targets US practices that disrupt global supply chains.  The second is America’s barriers to green products.

Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics Tradingview