The price on the USD/CAD currency pair chart showed a surge yesterday, what exactly happened?
Two factors are seen to have influenced the pattern of the increase.
First, the Canadian dollar experienced a depreciation due to the Canadian consumer price index (CPI) data published showing a declining inflation rate.
Canada's annual inflation reading came in at 5.9% for January, lower than expectations of 6.1%.
In addition, the US dollar is showing a re-strengthening after flattening at the beginning of the week following public holidays in the United States (US).
Market sentiment that is considered to be risky with the geopolitical tension factor involving Russia and the US is also seen to give an advantage to the US dollar.
On the USD/CAD chart, the price has surged from the 1.34500 level to reach a high of around 1.35500 at the end of the New York session.
Continuing trading into the Asian session and the beginning of the European session today (Wednesday), the price is still moving slowly in the height zone.
The price movement which is also above the Moving Average 50 (MA50) support level on the 1-hour time frame on the USD/CAD chart is seen to give a bullish signal for the price.
If the rise continues higher, the price will head towards the 1.36600 zone to record the latest 7-week high.
The zone was a price resistance during trading in early January.
Although inclined to continue strengthening, analysts do not rule out the price can make a sudden plunge.
A break back below the 1.3500 level will push the price lower to around 1.34000.
Next, the price will continue to decrease again reaching around the support of 1.3300 which was the support for the price before.
