KEY POINTS:USD/CAD is approaching a key swing level at 1.3725The BoC shifted to a stronger neutral stance, but didn't validate rate hike betsThe Fed delivered on expectations, but Powell sounded more dovishFocus on Canada CPI, US NFP and US CPIFUNDAMENTALOVERVIEWUSD:The USD has been weakeningacross the board since last week’s FOMC decision. The Fed delivered onexpectations cutting by 25 bps and signalling a higher bar for further ratecuts, but Fed Chair Powell’s press conference was seen as fairly dovish. In fact, instead ofsounding as neutral as possible and stressing data-dependency, he downplayedthe inflation risk and emphasized the labour market weakness, suggesting thatthere’s more tolerance for higher inflation than for weaker labour market. The focus this week will beon the US NFP and CPI reports that will wrap up the last real trading week ofthe year before market participants prepare for the holidays. Right now, themarket is pricing 57 bps of easing by the end of 2026. If we get strong US data,especially on the labour market side, we will likely see a hawkish repricingwhich would give the US dollar a boost. On the other hand, weak data shouldweigh on the greenback further as the market will bring rate cut bets forward. CAD:On the CAD side, the BoClast week held interest rates steady but didn't validate the market's rate hikebets just yet. In fact, the central bank kept a cautious tone and highlightedthe weak details in the recent GDP and employment reports despite acknowledgingthe improvements. The market is still fully pricing a rate hike by the end of2026. Today, we get the latest Canadian inflation report. The most important data towatch will be the underlying inflation measure, that is the Trimmed Mean CPIY/Y, which is expected at 2.9% vs 3.0% prior. If we get a lower-than-expectedfigure, we will likely see some CAD weakness as traders could pare back a bitthe rate hike bets. On the other hand, if the data surprises to the upside (thebigger the surprise, the stronger the reaction), we should see CAD strength asthe market will likely bring forward rate hike expectations.USDCAD TECHNICALANALYSIS – DAILY TIMEFRAMEOn the daily chart, we cansee that after breaking the major trendline on a blockbuster Canadianemployment report, the USDCAD pair extended the drop into 3-month lows. We arenow close to the key swing level around 1.3725. That’s where we can expectthe buyers to step in with a defined risk below the level to position for arally into the 1.39 handle. The sellers, on the other hand, will want to seethe price breaking lower to increase the bearish bets into the 1.3550 level next.USDCAD TECHNICALANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we cansee that we have a downward trendline defining the bearish momentum. If we geta pullback into the trendline, we can expect the sellers to lean on it with adefined risk above it to position for a drop into new lows. The buyers, on theother hand, will look for a break above the trendline to pile in for a rallyinto the 1.39 handle next.USDCAD TECHNICALANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we cansee that we have a minor support around the 1.3754 level. The buyers willlikely continue to step in there with a defined risk below the support totarget a pullback into the trendline. The sellers, on the other hand, will lookfor a break lower to pile in for a drop into the September lows around the1.3725 level. The red lines define the average daily range for today. UPCOMING CATALYSTSToday we get the Canadian CPI data. Tomorrow, we have the US NFP report.On Thursday, we get the US CPI data. This article was written by Giuseppe Dellamotta at investinglive.com.