The Canadian dollar fell in value in the New York session yesterday as the market reacted to the latest published inflation data.
Canada's annual consumer price index (CPI) reading in January 2024 fell to 2.9% from 3.4% the previous month, making it the lowest inflation rate since June last year.
This sparked expectations for the Canadian central bank (BOC) to implement faster interest rate cuts than the Federal Reserve (Fed) which is seen to be in no rush to do so.
The published data had an impact on the price movement on the chart of the USD/CAD currency pair yesterday.
Initially the price drop was displayed since the European session when the US dollar was also traded weakly yesterday which was influenced by the current market sentiment factor.
But the price rose again following the Canadian dollar which experienced a depreciation and pushed the price to higher levels again until the end of the trading session in New York.
If observed on the USD/CAD chart, the price dropped almost to around 1.34700 before the price bounced back past the 1.35000 level and reached the height of 1.35300.
The pattern of price increases is seen not to continue in trading that continues into the Asian session this morning (Wednesday), but the price is still hovering above the 1.35000 level.
Still giving a bullish signal at the moment when the price remains above the Moving Average 50 (MA50) support line on the 1-hour time frame on the chart.
A higher rise if successfully continued after this is aimed at heading towards the concentration zone at the height of 1.36000.
Last week also saw a price jump of almost 20 pips only to touch that level.
As for the forecast for the price drop, a lower plunge will occur if the price has started to fall below the 1.35000 level.
The decline is likely to continue and break the level at the opening of the early week near 1.34600.
Next, for a lower drop target is to go to the 1.34000 level.
