FX.co ★ USD/CAD dynamics scenarios on November 22, 2023

According to the data published Tuesday, annual inflation in Canada in October decreased faster than anticipated: the Consumer Price Index (CPI) dropped to 3.1% from 3.8% in September, even below the forecast of 3.2%. Additionally, the annual core CPI, excluding food and energy prices, declined to 2.7% from the previous 2.8%.

Despite the fact that the U.S. dollar remains under selling pressure triggered by last week's inflation data in the U.S., the USD/CAD pair still maintains its medium-term (above the support level of 1.3515—200 EMA on the daily chart) and long-term (above the support level of 1.3170—200 EMA on the weekly chart) upward dynamics.

As of writing, USD/CAD was trading near the level of 1.3720, 10 points below the crucial short-term resistance level (200 EMA on the 1-hour chart).

A breakout of this resistance level will be the first signal to resume long positions, and a break of the upper level of the range (between levels 1.3775 and 1.3680) will confirm it.

In an alternative scenario, USD/CAD will break support levels at 1.3700, 1.3680 (lower boundaries of recently established ranges, as well as 50 EMA on the daily chart) and head towards key support levels at 1.3560 (144 EMA on the daily chart), 1.3515 (200 EMA on the daily chart), separating the medium-term bullish market from the bearish one.

In turn, further decline and a breakdown of key support levels at 1.3200, 1.3170 (200 EMA on the weekly chart) will return USD/CAD to the long-term bearish market zone.

For now, long positions remain preferable above support levels 1.3700, 1.3680.

Support levels: 1.3700, 1.3680, 1.3640, 1.3600, 1.3560, 1.3515, 1.3450, 1.3400

Resistance levels: 1.3714, 1.3730, 1.3775, 1.3800, 1.3860, 1.3890, 1.3900, 1.3970, 1.4000