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  • USD/CAD sightly corrects lower after upbeat Canadian CPI. 
  • US dollar remains positive amid rising yields. 
  • The uptrend in crude oil prices cap the gains.

The USD/CAD price analysis suggests a bullish action as the price jumped on upbeat US CPI figures on Tuesday. However, the price couldn’t hold above the 1.2700 mark.

At the time of writing, the USD/CAD pair is trading at 1.2668, down 0.18% on Wednesday during the NY session.

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The Canadian CPI data published in the recent hour that helped the Canadian dollar to boost slightly. The CPI m/m rose to 0.2% against the expected figure of 0.1%. The previous month figure was 0.6%. Although the gain is very nominal, it shows that the economic recovery is on the track.

On the energy markets, the electronic trading price of US crude oil on the New York Mercantile Exchange rose 43 cents to $ 70.89 a barrel. The contract rose 1 cent on Tuesday to $ 70.46. Brent crude, the benchmark for international oil prices, rose 43 cents in London to $ 74.03 a barrel. The day before, it rose 9 cents to $ 73.60 per barrel. The Canadian dollar may find some respite from the rising crude oil prices.

On the other hand, investors fear that higher inflation in the US could put pressure on the Federal Reserve and other central banks to cut concessional lending and other incentives that will help lift stock prices. The Fed believes that any spike in US consumer inflation will be temporary and interest rates will be kept low until they recover.

Market-based measures to offset inflation have put sustained upward pressure on nominal interest rates, as would be expected in this phase of the business cycle. Adjusted for inflation alone, the nominal returns on 10-year OIS in the euro area will be more than 70 basis points higher than at the start of the year.

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USD/CAD price technical analysis: Key SMAs to support upside

USD/CAD 4-hour price chart analysis
USD/CAD 4-hour price chart analysis

The USD/CAD price remains well above the 20-period SMA on the 4-hour chart. Moreover, the 50-period and 200-period SMAs keep the price supported. However, the recent downside could only be a correction that may find some respite around the 1.2650 area. On the upside, acceptance above the 1.2700 area may lead towards the 1.2800 mark. So far, the average daily range is 45% which is quite low. It indicates that the traders are still shy to enter in either direction. However, this could be temporary and the trend action may trigger later.

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