The Canadian dollar fell in the New York session yesterday after the market reacted to the published inflation data.
Canada's consumer price index (CPI) for February's annual reading was 5.2%, down from 5.9% the previous month, and beating expectations of 5.4%.
This latest reading shows Canada's lowest inflation since January 2022 and is seen to be in line with the Bank of Canada's (BOC) monetary policy which has taken steps to temporarily halt policy tightening.
You can see the price movement on the chart of the USD/CAD currency pair which bounced back yesterday even though the US dollar is still trading gloomy ahead of the FOMC meeting early Thursday morning.
The price hovered in the RBS (resistance become support) zone of 1.36500 before bouncing up yesterday when the CPI data was published reaching a height of around 1.37300.
The price then flattened slowly after reaching that height until trading resumed in the Asian session this morning (Wednesday).
Investors began to evaluate the signal of a change in the bullish trend after the price began to move above the support level of the Moving Average 50 (MA50) on the 1-hour time frame of the USD/CAD chart.
However, the direction of movement will be clearer after the results of the FOMC meeting.
If the US dollar is stronger against the Loonie, the price will continue to rise higher towards the 1.38000 resistance level that was tested last week.
Passing the resistance, the high level at 1.38600 will be the focus to be tested again and it is not impossible that the price can continue to rise higher.
On the other hand, the situation of the US dollar significantly depreciating will see the price plunge through the RBS 1.36500 zone before heading to the next target at 1.35000.
Hitting that zone or lower, will record the latest 4-week low for the price with a clear indication of bearish trend movement.
