USD/CAD clings to gains near 1.4100 as Canadian inflation data takes center stage

• USD/CAD stays firm near 1.4100 as the US Dollar performs strongly across the board.
• Fed Powell doesn't see any urgency for lowering interest rates aggressively.
• Traders await Canadian inflation data for fresh BoC interest rate cues.

The USD/CAD pair holds into gains near a fresh more than four-year high around 1.4100 in Monday's European session. The Loonie pair strives to maintain its winning spell for the seventh trading day on Monday on multiple tailwinds: strength in the US Dollar (USD) across the board on likely acceleration in the United States (US) inflation due to President-elected Donald Trump's victory in both houses and weakness in the Canadian Dollar (CAD) on increasing Bank of Canada (BoC) dovish bets.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, clings to gains near a fresh yearly high of 107.00. Market sentiment is slightly cautious as investors expect the Federal Reserve (Fed) to follow a more gradual policy-easing approach. S&P 500 futures trade cautiously during European trading hours.

On Thursday, Fed Chair Jerome Powell pushed back expectations of aggressive interest rate cuts but affirmed that the policy-easing cycle is intact, with inflation remaining on a sustainable track toward the bank's target of 2%.

"The economy is not sending any signals that we need to be in a hurry to lower rates," Powell said and added, "The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully."

Meanwhile, the CAD remains on the backfoot as trades expect the BoC to cut interest rates again by 50 basis points (bps) in the December meeting. For more interest rate cues, investors await the Canadian Consumer Price Index (CPI) data for October, which will be published on Tuesday. Statistics Canada is expected to show that month-on-month headline CPI rose by 0.3% after a 0.4% deflation in September. On year, the inflation data is expected to have grown by 1.9%, faster than the former reading of 1.6%.