Canada’s September CPI report gave traders a little something on both sides of the inflation debate.Headline inflation rose to 3.1% year over year from 3.0% in August, but came in below expectations of 3.2%. Meanwhile, inflation excluding gasoline slowed to 2.2% from 2.4%.Energy remains the problem area. Gasoline prices increased 27.8% from a year earlier, while fuel oil and other fuels surged 57.8%, with a greater impact on households in Atlantic Canada. Shelter inflation also accelerated, although rent growth held steady and mortgage interest costs continued to decline.The better news came from groceries. Annual inflation slowed to 1.7%, the lowest since May 2024, with fresh vegetables and sugar and confectionery prices declining from a year earlier. That is welcome relief, but slower inflation does not undo the earlier increases. Grocery prices remain 33.0% above September 2020 levels.What does it mean for the Bank of Canada?The headline moved higher, but energy drove the acceleration. The question for the Bank of Canada is whether those higher costs spread into other prices.Slower inflation excluding gasoline offers some reassurance. However, the 0.4% seasonally adjusted monthly increase warrants attention.For currency traders, higher inflation would normally support Canadian yields and the Canadian dollar, putting downward pressure on USDCAD. The softer-than-expected headline and slower non-gasoline inflation temper that argument.So, what are the technicals telling traders?Sellers have control. Can buyers defend 1.4082?USDCAD moved lower ahead of the report, reaching a session low of 1.4071. That took the price below the 38.2% retracement at 1.40818 of the rally from the August 21 low to the October highs near 1.42984.Following the report, the price recovered to 1.41119, but that bounce faded. The pair is back below 1.4100, trading near 1.4095.For buyers, holding above 1.40818 is the first requirement. It gives them a level to lean against and define risk. It does not, by itself, put them in control.A move back below that level—and staying below—would keep the sellers firmly in charge. The session low at 1.4071 would come back into focus, followed by the 100-day moving average at 1.40377. The price has not traded below that moving average since September 16.Broken support becomes resistanceOn the topside, buyers first need to get above the post-report corrective high near 1.4112.Above that sits a more important swing area between 1.41297 and 1.41532. That zone has defined turning points going back to November 2025 and again between June 19 and July 14 this year.The price broke above it on September 28. Now that USDCAD is back below, what was support becomes resistance.Getting above that area—and staying above—would give buyers a stronger say in the direction.Right now, however, they have work to do. Sellers remain in control, and 1.4082 is the short-term barometer. Stay above, and buyers can try to build a recovery. Move below, and the door opens for another shove lower.In the video, I walk through the levels that define the risk, the bias, and the next targets for USDCAD. This article was written by Greg Michalowski at investinglive.com.