• The USD/CAD reached the 200-day SMA but then fell to 1.3420.
• Better-than-expected Building data from Canada and rising Oil prices limit the CAD’s downside.
• Markets remain cautious, awaiting Thursday´s inflation data for more guidance.

The USD/CAD traded flat near the 1.3420 area on Wednesday. On the US side, no relevant data was released, while investor remains cautious ahead of Thursday's Consumer Price Index (CPI) data from July. However, the Loonie gained strength from robust Canadian Building Permits for July, and Oil prices rising to highs since November 2022.

After two days of trading strong, the USD backed off somewhat, with the DXY index consolidating at 102.50. As the American economic calendar remains empty, the focus is on inflation data on Thursday which projections see the headline CPI slightly accelerating to 3.3% YoY and the Core CPI coming in at 4.8%.

On the CAD’s side, Building Permits from Canada from July unexpectedly rose by 6.1% MoM in July, while markets expected a 3.5% decline and boosted the Loonie. In addition, the West Texas Intermediate (WTI) barrel jumped above $84.00 for the first time since November 2022 and helped the CAD to trade resilient against its rivals.

USD/CAD Levels to watch

According to the daily chart, the technical outlook remains neutral to bullish for the short term as the bulls gain momentum. The Relative Strength Index (RSI) points north above its middle point, while the Moving Average Convergence (MACD) histogram displays larger green bars. Plus, the pair is above the 20 and 100-day Simple Moving Averages (SMA) but below the 200-day SMA, suggesting that on the bigger picture, the bulls are still in command over the bears but still need to overcome the 1.3500 level to confirm to upside.

Support levels: 1.3450, 1.3400,1.3320.

Resistance levels: 1.3500 (200-day SMA), 1.3550, 1.3570.

USD/CAD Daily chart