USD/CAD hits fresh two-month highs near mid-1.3400s

The greenback continues gain traction against its Canadian counterpart, lifting the USD/CAD pair to fresh two-month tops near mid-1.3400s.

After an initial dip below the 1.3400 handle during early Asian session on Wednesday, the pair regained traction ahead of the NA session. The ongoing bearish slide in oil markets, with WTI crude oil trading with losses in excess of 1%, has been a key factor weighing on the commodity-linked currency - Loonie.

This coupled with growing prospects for an eventual Fed rate-hike action, with the CME group's FedWatch Tool pricing-in over 80% probability of such a move at the central bank's upcoming meeting on March 14-15,  is also supportive of the pair's strong up-surge. 

With today's up-move the pair has now surged nearly 350-pips from the vicinity of 1.3100 handle touched in late Feb. and now look forward to the release of US ADP report for fresh impetus. Today's economic docket also features the release of Canadian Building Permits and Labor Productivity data, while from the US Revised Nonfarm Productivity is also due for release during early NA session.

Technical levels to watch

A follow through buying interest above 1.3460 level seems to accelerate the up-move further towards reclaiming the key 1.3500 psychological mark before the pair continues scaling higher towards its next major hurdle near 1.3555-60 area.

On the downside, the 1.3400 handle now seems to have emerged as immediate support. Failure to defend the said handle, leading to a subsequent weakness below 1.3375-70 support area, is likely to trigger a corrective slide towards 1.3315 horizontal support en-route 100-day SMA support near 1.3285 region.