• USD/CAD is struggling for decisive action as investors are awaiting Canada’s inflation for further guidance.
• Canada’s core and headline inflation are seen softening to 3.9% and 3.7% respectively.
• USD/CAD is marching towards the downward-sloping trendline plotted from 1.3862.

The USD/CAD pair has turned sideways around 1.3553 after a solid opening in the Asian session. The Loonie asset is expected to remain lackluster as investors are awaiting the release of Canada’s Consumer Price Index (CP) and negotiations over US debt-ceiling talks for further guidance.

The US Dollar Index (DXY) has demonstrated a loss in the upside momentum after printing a fresh five-week high of 102.75, which has infused some strength in the risk-sensitive assets, portraying an improvement in market sentiment.

On the economic data front, Canada’s core CPI is seen softening to 3.9% from the former release of 4.3%. Headline CPI is seen declining to 3.7% vs. the prior release of 4.3%. A release of the anticipated Canada inflation report will allow the Bank of Canada (BoC) to continue to its current monetary policy.

USD/CAD is marching towards the downward-sloping trendline plotted from March 10 high at 1.3862 on a four-hour scale. On a broader note, the Loonie asset is forming an Ascending Triangle chart pattern, which demonstrates a contraction in volatility.

Advancing 20-period Exponential Moving Average (EMA) at 1.3486 is continuously providing support to the US Dollar bulls.

The Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which advocates the continuation of the upside momentum.

The upside bias will get strengthened if the Loonie asset manages to surpass the round-level resistance of 1.3600. This will expose the asset to May 21 low at 1.3644 followed by the round-level resistance at 1.3700.

On the flip side, a break below May 12 low at 1.3480 will fade the upside bias and will drag the asset toward April 04 low at 1.3406 and May 08 low at 1.3315.

USD/CAD four-hour chart