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  • The price action signaled exhausted buyers.
  • The Canadian inflation figures could really shake the market.
  • A new lower low activates more declines.

The USD/CAD price dropped in the last hour. The pair is trading at 1.3729 at the time of writing. In the short term, the price seems undecided ahead of the Canadian inflation data publication.

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The price is ranging after the economic data released yesterday. The US Inflation Production indicator rose by 0.4% versus the 0.1% expected, while Capacity Utilization Rate was reported at 80.3%, above 80.0% forecasts. On the other hand, the Canadian Housing Starts and Foreign Securities Purchases also came in better than expected.

Today, the Canadian Consumer Price Index may report a 0.1% drop in September versus the 0.3% drop in August. The Core CPI, Common CPI, Trimmed CPI, and Median CPI data will also be released. Higher inflation could force the BoC to continue hiking rates in the next monetary policy meetings.

The US Building Permits could drop from 1.54M to 1.52M, while Housing Starts are expected at 1.46M, below 1.58M in the previous reporting period. Also, the Crude Oil Inventories could have an impact on this market.

 Dollar Index price technical analysis: Falling wedge

US dollar index price

The Dollar Index rebounded. That’s why the USD took the lead versus its rivals. Now, it has jumped above the down trendline signaling a larger rebound. Still, we’ll have to wait for the price to confirm the breakout. Validating the Falling Wedge pattern may announce a new leg higher. The DXY maintains a bullish bias despite temporary drops.

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USD/CAD price technical analysis: Overbought

USD/CAD price

As you can see on the hourly chart, the USD/CAD pair registered only false breakouts above the 1.3808 – 1.3833 resistance zone, signaling exhausted buyers. Now, it has dropped below the ascending pitchfork’s lower median line (LML), signaling strong downside pressure.

Its failure to stay above the median line (ml) showed an overbought situation. Still, only a new lower low, a valid breakdown below 1.3695 – 1.3677, and a closing under 1.3694 activate a larger downside movement. The inflation data is high-impact and could bring sharp movements in both directions.