• USD/CAD may gain amid rising odds of a December Fed rate hike following strong jobs data.
• Traders await upcoming US CPI and PPI reports for further central bank policy signals.
• Tumbling crude oil prices continue to weigh on the commodity-linked Canadian dollar.

USD/CAD loses ground after two days of gains, trading around 1.4110 during Asian hours on Monday. However, downside momentum could be restrained as the US Dollar (USD) may regain ground. This potential strength is driven by rising odds of a December Federal Reserve rate hike after strong US labor data. Investors are now closely watching Tuesday’s US Consumer Price Index (CPI) report and Friday’s Producer Price Index (PPI) for further signals regarding the Fed’s upcoming policy decisions.

According to the CME FedWatch tool, the probability of another 25-basis-point rate hike at the December Federal Open Market Committee (FOMC) meeting has climbed above 78%. Robust US employment figures are providing significant support for the Greenback. Specifically, Nonfarm Payrolls (NFP) increased by 165,000 in October—easily topping the market consensus of 65,000 and building on September’s revised total of 60,000—while the Unemployment Rate edged down to 4.1%, beating expectations of 4.2%.

Additionally, the USD/CAD pair could find support as the commodity-linked Canadian Dollar (CAD) faces downward pressure from falling oil prices. Crude prices dropped after US President Donald Trump stated that further military strikes on Iran are “highly unlikely,” provided progress continues on Iran’s nuclear program and the Strait of Hormuz remains open. Trump also noted that the unpopular Middle East conflict, which pushed up energy costs, contributed to the Republicans’ recent midterm election losses.

In a phone interview with CNN reported by Reuters, Trump reaffirmed that additional military action would likely be unnecessary if Iran signs a firm agreement. Despite earlier hints at resuming major attacks after the midterms, no large-scale US military operations have been launched. Meanwhile, Iran has warned that it will retaliate against any future strikes by targeting US and Israeli assets.

Technical Analysis:

In the daily chart, USD/CAD trades at 1.4110. The pair holds above both the 50- and nine-day Exponential Moving Averages (EMAs), which suggests a constructive near-term bias as price extends its recovery off the recent lows. The 14-day Relative Strength Index (RSI) at 55.3 has eased back from prior overbought extremes but remains in neutral-to-positive territory, hinting that bullish momentum is still present without being stretched.

On the downside, initial support is located at the 50-day EMA at 1.4054, followed closely by the nine-day EMA at 1.4047, forming a tight demand cluster that underpins the short-term trend as long as it holds. With no clear resistance levels in the provided dataset, traders would likely monitor psychological and recent swing highs above 1.4111 for signs of fatigue, while a daily close back below the EMA cluster would undermine the bullish bias and signal a deeper corrective phase.