Macro Analysis
USD/CAD has established a clear upward trend on the daily chart over the provided period, moving from the 1.35 area to recent highs above 1.44. The pair currently trades near 1.371, consolidating after a significant rally.
The price action shows a generally positive correlation with the Macroflow Index, which is constructed from the US-Canada 10-year yield spread and gold. The index has also trended higher, largely in sync with the pair’s major moves. This alignment makes sense as a widening yield spread (positive for USD) and weaker gold (often negative for CAD) typically support USD/CAD.
However, notable periods of divergence exist. Most recently, in late February 2026, USD/CAD pulled back from its highs while the Macroflow Index continued to climb. This decoupling suggests other factors, such as oil price strength or Canada-specific economic data, may have temporarily provided support for the Canadian dollar.
From a technical perspective, the pair faces immediate resistance near the recent highs around 1.44. On the downside, the area around 1.355-1.360, which was previous resistance, now serves as a key support zone. A break below could signal a deeper correction.
Significant event risk lies ahead with concurrent policy decisions from the Bank of Canada and the Federal Reserve on March 18th. Markets widely expect both to hold rates steady. The focus will be on the respective statements and press conferences for clues on future policy divergence. Any hawkish tilt from the Fed relative to the BOC could reinforce the uptrend, while a more cautious Fed or resilient BOC could pressure the pair.
COT Analysis
USD/CAD has established a strong multi-month uptrend on the daily chart, recently reaching its highest levels since 2025. During this persistent price rise, the COT data shows a clear and growing divergence: commercial traders have been building a significant net short position relative to non-commercials. This suggests large institutions are increasingly hedging against the current uptrend as it extends. While the price trend remains up, this divergence highlights a notable and growing sentiment disconnect between price action and commercial positioning.
USD/CAD has established a clear uptrend on the daily chart, rising from near 1.35 in October 2024 to above 1.44 by early 2026. During this sustained price increase, the COT Large Traders Net Position ratio has steadily declined, showing a persistent divergence. This indicates that while the price climbs, large speculative traders have been consistently reducing their net long exposure over this period.
The USD/CAD has trended higher on the daily chart over this period, recently testing the 1.37 area. This price climb has occurred alongside a clear and sustained decline in the COT Asset Managers vs Dealers sentiment indicator, which has turned negative. This divergence, where price rises while large trader positioning becomes increasingly bearish, suggests weakening fundamental support for the rally. Traders should monitor this divergence for any potential shift in the current upward momentum.
