USD/CAD advances to 1.3650 ahead of crucial US inflation report

USD/CAD has strengthened 0.4% (55 pips) to 1.3650 as the US dollar gains traction ahead of Wednesday's critical Consumer Price Index release. The pair's advance reflects renewed dollar buying amid heightened geopolitical tensions and expectations for sticky US inflation. Oil prices have stabilized near $78 per barrel, providing limited support for the commodity-linked Canadian dollar. Markets are pricing in a 70% probability that US core CPI will remain elevated at 3.2% year-over-year, potentially reinforcing the Federal Reserve's hawkish stance. Technical analysis shows USD/CAD breaking above the 1.3620 resistance level, with momentum indicators signaling further upside potential. Next resistance targets 1.3680 (September high), while support has formed at 1.3600. A stronger-than-expected inflation reading could propel the pair toward 1.3700, particularly if oil prices fail to recover and risk sentiment remains fragile.