Will the USD/CAD Exchange Rate Hold Steady in the 1.38 Range as the Canadian Dollar Rebounds?

Will the USD/CAD Exchange Rate Hold Steady in the 1.38 Range as the Canadian Dollar Rebounds?

03.09.2026 New

In U.S. currency trading the previous day, the Canadian dollar rose against the U.S. dollar following the Bank of Canada’s policy announcement. While the Bank of Canada kept its policy rate unchanged at 2.25%, in line with market expectations, it indicated that the risk of inflation rising above target had increased.Governor Tiff MacLem’s mention of the possibility of multiple rate hikes as needed strengthened expectations for a rate hike later this year. The USD/CAD pair traded within a range of approximately 110 pips, between 1.3830 and 1.3940 Canadian dollars, and closed near 1.3840 Canadian dollars.The 1.3900–1.3940 CAD range is likely to act as resistance, while the 1.3830 CAD level is expected to serve as support.

European currencies saw the pound fall against the U.S. dollar amid concerns over the U.K.’s fiscal management. The yield on 10-year U.K. government bonds rose to its highest level since 2007, and uncertainty surrounding the budget to be announced by Finance Minister John Healey on October 28 weighed on the pound.The pound traded within a range of about 52 pips, between 1.3473 and 1.3525 dollars, and closed near 1.3483 dollars.While the $1.3525 level is viewed as resistance, attention is likely to focus on whether the $1.3470 level will act as support.

Today’s economic data includes the release of the August services sector Purchasing Managers’ Index (PMI, revised figures) for France, Germany, the Eurozone, and the UK, starting at 4:50 p.m. The Eurozone PMI is expected to remain flat at 51.7, and the UK’s at 52.8, compared to the preliminary figures.At 6:00 p.m., the Eurozone’s July Producer Price Index (PPI) will be released.At 9:30 p.m., the U.S. July trade balance and initial jobless claims for the previous week, as well as Canada’s July trade balance, will be released. U.S. initial jobless claims are expected to rise to 205,000 from the previous reading of 203,000, while Canada’s trade balance was previously a surplus of 3.86 billion Canadian dollars.At 22:45, the revised U.S. August Services PMI will be released, followed by the U.S. August ISM Non-Manufacturing Purchasing Managers’ Index at 23:00. The ISM Non-Manufacturing PMI is expected to come in at around 54.1–54.3, compared to the previous reading of 54.1.We will be watching closely to see how U.S. employment indicators and sentiment in the service sector influence the direction of North American currencies.