The USD/CAD pair is pushing to break above 1.3950 on Monday as the US Dollar (USD) strengthens, reaching a four-month high with the US Dollar Index (DXY) at 105.60. The Greenback’s rally is largely driven by expectations of higher fiscal deficit and inflation under President-elect Donald Trump, who pledged to raise tariffs and reduce corporate taxes. This outlook could prompt the Federal Reserve (Fed) to maintain a hawkish stance on interest rates.

Investors are closely watching the upcoming US Consumer Price Index (CPI) data for October, expected to show a slight rise in headline inflation to 2.6% and core inflation at 3.3%. The CPI release and Fed speakers may provide further direction on rates, although the Fed is not expected to shift policy without a major surprise.

In Canada, the Canadian Dollar (CAD) remains pressured by potential rate cuts from the Bank of Canada (BoC). Recent labor data fell short of expectations, with 14.5K jobs added versus a 25K forecast, and the unemployment rate holding at 6.5%. After a 50 basis-point cut in October, the BoC is likely to implement another rate reduction in December.

Key Levels:

• Resistance: 1.3950, if broken, could signal further upside.
• Focus: US CPI data and Fed speeches on inflation and rates.