Ella 
USD/CAD rallied for a fifth day on Tuesday, building on last week’s momentum above the 1.3600-1.3610 supply zone. Spot prices climbed to the 1.3815 area during the Asian session, hitting their highest levels since November 14, and continue to be well supported by strong bullish sentiment on the US dollar.
The U.S. Dollar Index (DXY), which tracks the greenback against a basket of currencies, climbed to its highest in more than five months on expectations the Federal Reserve will delay cutting interest rates amid stalemate inflation. Additionally, upbeat U.S. retail sales data released on Monday suggested that strong consumer spending could support inflation and force the Federal Reserve to keep interest rates higher for longer. At the same time, the hawkish outlook still supports rising U.S. Treasury yields, which is beneficial for the dollar.
On top of this, broad equity weakness amid ongoing geopolitical tensions has acted as another factor favoring the safe-haven dollar and provided support for USD/CAD. Meanwhile, the head of the Israeli military said Israel would respond to Iranian missile and drone attacks over the weekend, raising the risk of further escalation in the Middle East conflict. That helped crude oil prices build on an overnight rebound from two-week lows, supporting the commodity-linked Canadian dollar and limiting the pair’s gains.
