USD/CAD flirting with highs near 1.3400

The greenback is trading on a firm note vs. its Canadian neighbor on Monday, lifting USD/CAD to the boundaries of 1.3400 the figure, or session tops.

USD/CAD gains limited around 1.3450

After climbing as highs as the vicinity of 1.3450 on Friday, the pair came under some selling pressure although the 1.3370/80 band has so far offered quite a decent barrier for further selling attemps.

USD remains bid in a context dominated by the risk-off trade following North Korea’s incident, while markets’ bets on a potential rate hike by the Federal Reserve next week keep sustaining the upside in the buck.

Friday’s comments by Chief Janet Yellen have left the door open for a March hike, which has been also advocated by other FOMC governors in recent weeks. The solid performance of US yields vs. their Canadian peers has been acting as the main driver behind the pair’s price action as of late, bringing to the fore the policy divergence between the Fed and the BoC.

On the positioning front, CAD net longs have increased to the highest level since early February 2013, while Open Interest remains on the rise, all during the week ended on February 28 and as per the latest CFTC report.

USD/CAD significant levels

As of writing the pair is gaining 0.13% at 1.3392 and a breakout of 1.3438 (high Mar.2) would aim for 1.3463 (high Jan.3) and finally 1.3575 (23.6% Fibo of the 2016 drop). On the other hand, the immediate support lines up at 1.3371 (low Mar.3) followed by 1.3320 (low Mar.2) and then 1.3311 (38.2% Fibo of the 2016 drop).