The movement of the Canadian dollar was in focus in the New York session yesterday as investors assessed the latest inflation data release.
Canada's annual consumer price index (CPI) reading for March came in lower at 4.3%, down from the previous reading of 5.2%.
This is the lowest level of inflation recorded since last August 2021, showing that the effects of aggressive monetary policy tightening by banks since last year are still ongoing.
The Bank of Canada (BOC) is seen to be moving into a looser phase after starting to stop policy tightening earlier this year.
Therefore, this has had a depreciating effect on the value of the Canadian dollar during yesterday's trading.
The price chart of the USD/CAD currency pair shows a bullish pattern reoccurring in the New York session yesterday.
The increase in prices however was relatively modest due to the US dollar currency also trading weakly again with market sentiment restored by positive Chinese economic data.
The price that managed to break above the support level of the Moving Average 50 (MA50) on the 1-hour time frame on the USD/CAD chart is seen hovering back to the focus level of 1.34000.
Continuing trading today (Wednesday), the price is seen trying to escape to a level higher than 1.34000, but the movement is still slow until the European session.
If the increase successfully continues in the New York session, analysts expect the price increase to reach the zone around 1.35000 again to display an interesting reaction around that area.
Next, the height reached at the beginning of last week around 1.35500 will be the target to be tested.
On the other hand, if the price plunges again below 1.34000, the price support level at 1.33000 which was reached last Friday will be targeted again.
A lower break above that level would mark a recent 7-month low with the next target being to reach 1.32000.
