USD/CAD breaks last week's high

USD/CAD is trading at a three-month high as the market grapples with a strong US dollar, a fading reflation trade and fallout from yesterday's Bank of Canada decision.

There were no clear sell signals for the loonie in any of those events but positioning in CAD was crowded and a squeeze appears to be underway.

The next area of resistance is the 200-day moving average at 1.2629 followed by a series of highs in April up to 1.2654. If that all gives way then it could be a viscous pain trade up to the high 1.20s.

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