The USD/CAD pair ended a two-day winning streak during Thursday's Asian trading session, temporarily consolidating around 1.4250. Despite this short-term consolidation, the pair still retains the potential for further upward movement given the Federal Reserve's continued hawkish stance. US October CPI inflation data exceeded market expectations, prompting Waller to support a 25 basis point rate hike. He also indicated that a 50 basis point hike could be considered if inflation continues to worsen. The CME FedWatch Tool shows the market currently pricing in an 87% probability of a December rate hike, with a 13% chance of a one-off 50 basis point increase. TD Securities analysts believe the US dollar still has room to rise against some non-US currencies, with short-term opportunities for USD/CAD and USD/KRW strengthening. Divergent employment data between the US and Canada, with Canada's rising unemployment rate and slowing wage growth, reduces the likelihood of the Bank of Canada tightening policy. The gap in expectations regarding the US central bank's policy keeps USD/CAD at a high level. Meanwhile, as a commodity currency, the Canadian dollar is also under pressure from falling oil prices. Easing tensions between the US and Iran, coupled with increased global supply, have put downward pressure on international oil prices. The OPEC monthly report released on Wednesday showed that, driven by increased production from Saudi Arabia, OPEC+ crude oil production surged by 2.04 million barrels per day in October, reaching a total output of 41.23 million barrels per day. This supply expansion further suppressed oil prices, indirectly negatively impacting the Canadian dollar. However, the Canadian dollar is not entirely weak and also has some local support. The market has begun pricing in the possibility of a Bank of Canada interest rate hike. Canada's September CPI rose to 3.1% year-on-year, higher than August's 3.0%. Additionally, the Democratic victory in the US midterm elections has led to market expectations of easing external trade pressures, providing a slight boost to the Canadian economic outlook. On the daily chart, the USD/CAD pair maintains a mildly bullish pattern, with the price holding above the 100-day moving average and the 20-period Bollinger Band, indicating continued buying pressure on dips. The 14-period RSI reading is around 56, indicating moderate upward momentum and not yet severely overbought, suggesting that previous overbought signals have been corrected. The first resistance level is the upper Bollinger Band at 1.4320; a decisive break above this level would open up further upside potential. The initial support level is located in the confluence zone of the Bollinger Middle Band and the 100-day moving average, between 1.4045 and 1.4060. If selling pressure intensifies, deeper support is seen at the lower Bollinger Band at 1.3910. On the 4-hour chart, after a surge, the price has entered a period of consolidation at high levels, with indicators showing some signs of weakening, indicating a continuation phase after the upward move. As long as the 1.4045-1.4060 support zone holds, the medium-term bullish structure remains intact. Editor's Summary The USD/CAD pair is currently in a tug-of-war between bulls and bears. High expectations of further Fed rate hikes are supporting the US dollar, while declining oil prices are putting downward pressure on the Canadian dollar. However, rising Canadian inflation is providing some buffer for the Canadian dollar, limiting its upward movement. Short-term risks: Unexpectedly strong Canadian inflation and employment data could weigh on the USD/CAD exchange rate; potential opportunities include persistently sticky US inflation and further hawkish comments from the Fed, which could push the exchange rate above resistance levels.