Investing.com - The U.S. dollar was almost unchanged against its Canadian counterpart on Monday, hovering close to more than five-year highs as expectations for a U.S. rate hike this year continued to support demand for the greenback.
USD/CAD hit 1.1843 during early U.S. trade, the pair's highest since May 2009; the pair subsequently consolidated at 1.1781.
The pair was likely to find support at 1.1596, Friday's low and resistance at 1.1951.
Demand for the greenback broadly supported by the diverging monetary policy stance between the Federal Reserve and central banks in Europe and Japan.
A recent string of upbeat U.S. data sparked optimism over the strength of the country's economic recovery and added to expectations for the Fed to soon raise interest rates.
The loonie was higher against the euro, with EUR/CAD retreating 0.80% to 1.4032.
The euro came under pressure after official data showed that German inflation slowed to the lowest level since 2009 in December.
German consumer price inflation accelerated at an annualized rate of 0.2% last month, below forecasts for 0.3% and slowing from 0.6% in November.
The data added to concerns over the risk of deflation in the euro area.
The single currency also weakened after European Central Bank President Mario Draghi said Friday the risk of it not fulfilling its mandate of price stability is higher now than six months ago.
The remarks indicated that the likelihood of full blown quantitative easing has increased ahead of the ECB’s meeting on January 22.