USD/CAD Price Analysis: Refreshes weekly high as soft Canadian CPI supports steady BoC policy

• USD/CAD has refreshed its weekly high at 1.3230 as BoC might skip the interest rate hike ahead.
• The US Dollar Index has sensed fragile barricades around 102.70 as the focus is on the speech from Fed Powell.
• USD/CAD has delivered a breakout of the Bearish Wedge chart pattern, which indicates a bullish reversal.

The USD/CAD pair has displayed a marginal correction after printing a fresh weekly high at 1.3230 in the European session. The Loonie asset faced heavy selling pressure after Canada’s Consumer Price Index (CPI) for May softened as expected by the market participants.

Monthly headline CPI has registered a pace of 0.4% while the street was estimating a pace of 0.5%. Last month, headline CPI showed a velocity of 0.7%. Annualized headline inflation has decelerated to 3.4% as expected by the market participants. The Bank of Canada (BoC) has got a reason to skip policy-tightening again as May’s labor market data was also below expectations.

Meanwhile, the US Dollar Index (DXY) has sensed fragile barricades around 102.70 as the focus in on the speech to be delivered by Federal Reserve (Fed) chair Jerome Powell at 13:30 GMT.

USD/CAD has delivered a breakout of the Bearish Wedge chart pattern on a two-hour scale, which indicates a bullish reversal. Potential resistance is plotted from June 07 low at 1.3321. The Loonie asset has comfortably shifted above the 50-period Exponential Moving Average (EMA) at 1.381, which conveys that the short-term trend has turned positive.

A range shift move into the 60.00-80.00 territory from the 40.00-60.00 area has activated the bullish momentum.

Going forward, a decisive move above June 07 low at 1.3321 would drive the asset to June 12 high at 1.3384 and June 06 high at 1.3452.

On the flip side, a downside move below June 16 low at 1.3177 could expose the asset to June 22 low at 1.3139 followed by the round-level support at 1.3100.

USD/CAD two-hour chart