The Canadian dollar (CAD) is hovering near its four-month peak against the US dollar, buoyed by rising oil prices and bets on potential interest rate cuts in 2024. However, the upcoming Canadian Consumer Price Index (CPI) report on December 20th could throw a wrench in the works.

Here’s the lowdown:

• Oil prices on fire: Disruptions in maritime trade due to attacks by Yemeni rebels have pushed up oil prices, a major Canadian export. This fuels the loonie’s strength.
• Rate cut hopes: The Federal Reserve’s hint at possible interest rate cuts in 2024 is boosting risk appetite for central bank easing globally, and the CAD is riding the wave.
• CPI in focus: The upcoming Canadian Consumer Price Index (CPI) report is expected to show inflation slowing down to 2.9% in November, from 3.1% in October. A higher-than-expected number could prompt the Bank of Canada to hold onto current rates, further strengthening the loonie.

Technical traders are also eyeing opportunities:

• USDCAD: Analysts see the upcoming CPI data as the catalyst for a potential breakout above the current resistance zone around 1.33489. Confirmation on lower timeframes is advised before entering a trade.
• EURCAD: This pair is steadily climbing towards a supply zone, where it could face selling pressure from multiple resistance levels. A bearish bias is favored here.
• CADJPY: Similar to EURCAD, CADJPY is trending upwards towards a supply zone, with bearish technical indicators suggesting a potential reversal. Again, wait for confirmation before taking a position.

In a nutshell: The Canadian dollar is looking strong, fueled by oil prices and hopes for lower interest rates. The upcoming CPI report is a key event to watch, as it could determine the loonie’s next move. Keep your eyes on technical charts for potential trading opportunities, but remember to tread cautiously and seek confirmation before jumping in.