The Canadian Dollar (CAD) is holding onto modest gains against the US Dollar (USD) on Tuesday, overshadowed by the focus on US inflation data. While the CAD saw some positive signs from domestic data, investor attention remains firmly on the Federal Reserve’s (Fed) next move.

US Inflation Steals the Spotlight:

• Canadian economic data this week has been limited, with only a slightly better-than-expected decline in March wholesale sales.
• Investors are primarily focused on US inflation figures, seeking clues about the Fed’s monetary policy path.
• Higher-than-expected US producer price index (PPI) for April adds to inflation concerns, potentially delaying Fed rate cuts.

CAD Holds Steady, Technical Outlook Uncertain:

• Despite broader market fluctuations, the CAD maintains its position against the USD for now.
• The USD/CAD pair is trading within a familiar range near 1.3660, lacking a clear directional bias.
• Technical indicators provide mixed signals:
  • Support exists at the 50-day EMA near 1.3640 and the 200-day EMA at 1.3546.
  • The pair remains below the recent swing high of 1.3850, suggesting capped upside potential.