USD/CAD bounces off lows, looks to retake 1.3400

After dropping to fresh daily lows near 1.3380 during overnight trade, USD/CAD has now gathered some attention and is approaching the key barrier at 1.3400 the figure.

USD/CAD looks to data

The pair lost some upside momentum in recent sessions, although it manages well to keep the trade in multi-week tops around the 1.3400 handle for the time being.

Rising expectations of a Fed’s move at the March meeting have been sustaining the USD-rally as of late, although the up move appears somewhat exhausted as market bets for a rate hike stay well above 80%.

According to agency Reuters, the probability of higher rates next week is currently above 85% based on Fed Funds futures prices.

The divergence in policies from the Fed and the Bank of Canada has been the almost exclusive driver for the pair’s price action in recent weeks, relegating crude oil dynamics to a secondary role.

Data wise today, Canadian and US trade balance figures are due along with the IBD/TIPP index on Economic Optimism.

USD/CAD significant levels

As of writing the pair is losing 0.14% at 1.3390 facing the next support at 1.3371 (low Mar.3) followed by 1.3359 (23.6% Fibo of 1.3601-1.2967) and finally 1.3320 (low Mar.2). On the upside, a breakout of 1.3438 (high Mar.2) would aim for 1.3463 (high Jan.3) and finally 1.3465 (78.6% Fibo of 1.3601-1.2967).