USD/CAD Rally Eyes Yearly Highs Amid Softer Inflation and Event Risk

The Canadian dollar has seen a significant rally in recent weeks, with the USD/CAD pair advancing more than 3.5% from its August low and posting four consecutive weekly gains.

This surge has brought the bulls close to the yearly highs at 1.4239/48, with momentum nearing its strongest levels since early July.

However, the technical structure remains constructive, but a confirmed breakout above the yearly high is needed to fuel the next major leg of the rally.

The broader market is awaiting key event risk in the form of the U.S. Non-Farm Payrolls report on Friday, which could impact the Fed's interest rate decisions and subsequently influence USD/CAD.