With USD bulls awaiting US PPI, Canadian Dollar hovers near one-month low around 1.4250

• USD/CAD consolidates within its bullish trend on Friday, with Dollar buyers taking a pause.
• Gains in oil lend support to the Loonie, helping cap the pair's advance.
• Ahead of the US PPI release, expectations of an imminent Fed rate hike and risks surrounding Iran support USD bulls.

A bullish consolidation keeps USD/CAD close to a one-month high in the mid-1.4200s during the first half of Friday's European session, following strong gains over the past week or so.

With buyers taking a pause after a sharp three-day advance to its highest level since April 2025, the US Dollar (USD) edges lower. A modest rise in crude oil also appears to support the commodity-linked Loonie, helping restrain USD/CAD. Nevertheless, several factors should remain supportive of the Greenback and help cushion any decline in the pair.

Traders have moved to price in tighter monetary policy after hawkish remarks from several Federal Reserve (Fed) officials followed stronger-than-expected US consumer inflation figures for October. Markets now fully price in a December rate hike of 25 basis points (bps), while putting the probability of a larger 50-bps increase next month at around 13%. Uncertainty in the Middle East adds to this support for USD bulls.

US President Donald Trump delivered another warning to Iran on Thursday, saying those responsible for any attack on American officials would no longer exist. He also said he would not hesitate to undertake further military action should circumstances warrant it. In a Truth Social post, Trump further stated that the US does not need a deal with Iran and that those days had long since passed.

A geopolitical risk premium also persists as attacks continue on Saudi Arabia's energy infrastructure and commercial vessels in the Strait of Hormuz, lending support to both crude oil and the safe-haven Greenback. Attention now turns to the US Producer Price Index (PPI). Together with speeches by influential FOMC members, the release would shape USD demand and give USD/CAD some fresh impetus.

Can the dollar extend its rally as hot US inflation strengthens Fed hike bets?

Describing the Dollar's advance, ING analysts say “this week has seen a powerful, macro-driven rally in the Dollar,” while short-dated US yields are now “close to 40bp higher since Tuesday morning, when the Fed's Christopher Waller mused over the need for a 50bp hike in December.” In their assessment, the market has “since adopted the view that back-to-back December and January hikes look likely, while extending the full Fed adjustment from here to a full 85bp of tightening.”

For the next catalyst, ING says October's US PPI “looks likely to keep the narrative of hot US inflation alive.” The bank anticipates close “scrutiny into the components of PPI, such as healthcare, airfares and software, that feed into the Fed's preferred PCE inflation data – the next release of which is on 25 November.” ING also cautions that, “were that core PCE to rise 0.3% month-on-month for the third month in a row, expectations of a 50bp December hike would grow,” further supporting the recent repricing at the short end of the US yield curve.

USD/CAD on the daily chart

Can USD/CAD Sustain Its Technical Uptrend?

A near-term bullish bias remains intact as USD/CAD trades comfortably above its 200-period Exponential Moving Average (EMA) at 1.3968. For further gains to gain technical backing, however, buyers need to follow through beyond the previous year-to-date high near 1.4300.

Should the pair slip below immediate support at 1.4200, buying interest is more likely to emerge and contain the retreat around 1.4125. The next level is 1.4100; a break below it could bring the 200-day EMA near 1.3968 into focus. While prices hold above this moving-average support, the technical set-up suggests corrective declines are likely to remain contained before a more pronounced bearish phase can take hold.

(The technical analysis of this story was written with the help of an AI tool. Know more.)