By Ketki Saxena
Investing.com -- The Canadian dollar reached a one-week high against the US dollar as risk sentiment turned sharply risk-on after softer-than-expected CPI data boosted bets supported riskier assets, including the loonie.
October’s headline US CPI came in at a flat month over month, vs. a forecast of 0.1% and down from a 0.4% reading in the previous month.
The CPI data boosted bets that the US Federal Reserve is at its terminal rate, with traders now expecting cuts from the Fed in May 2024.
“The Canadian dollar has reset sharply higher on improvements in rate differentials, borrowing costs and overall risk appetite,” said Karl Schamotta, chief market strategist at Corpay.
The US dollar meanwhile retreated against a basket of major currencies.
On a technical level for the pair, analysts at FXStreet note, “Shorts on the USD/CAD will be looking to drag the pair back down towards the 50-day Simple Moving Average (SMA) near 1.3650. Longer-term support is coming from the 200-day SMA currently pushing into the high side of 1.3500.”
“Tuesday’s downturn on the USD/CAD chart is helping to solidify a potential lower high chart pattern, with a technical resistance zone building in from 1.3750 to 1.3800. Meanwhile, USD bulls will be hoping for a bounce from the rising trendline drawn from July’s swing low into 1.3100.”