USD/CAD Analysis: The Loonie Strengthens amid Rising Inflation

Yesterday, data from Statistics Canada was published, which testified to the stability of inflation in the country: the rise in prices for the month amounted to +0.6% (+0.3% was expected).

This increased the likelihood that the Bank of Canada will raise the rate yet again. Now it is at a maximum for 22 years and is 5.0%.

As a result, USD/CAD is declining today after a volatile Tuesday.

Bullish arguments:

→ the price may be supported by the median line and the lower limit of the current ascending channel;
→ the price may be supported by the level of 1.34, which previously served as resistance;
→ support may continue to be provided by the level of 1.344.

Bearish arguments:

→ the price made a false breakout of the top on August 8;
→ resistance is provided by the psychological level at 1.35;
→ divergence on the RSI indicator;
→ the price is in the zone of a sharp fall in the rate recorded on June 1 — sellers can maintain control.

Since August 1, the USD/CAD rate has risen by more than 2.3%. In such conditions, a correction may be a fairly natural scenario.

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