The Canadian dollar is seen to remain stable in the market supported by positive sentiment in the global crude oil market.
This time, the latest development in the oil market is supported by reports that declining crude oil inventories of the United States (US) will expect an increase in crude oil demand as the US is one of the largest oil consumers in the world.
It can be observed that the price movement on the chart of the USD/CAD currency pair displays a bearish pattern since the beginning of this week.
But after the strengthening of the Loonie pushed the price up to the level of 1.22500 in the New York session yesterday, the price started to decline again until the end of the session to close the trade around the level of 1.23000.
The rebound in prices was driven by the re -strengthening of the US dollar after markets reacted to the Federal Reserve’s (Fed) talks for measures to tighten their monetary policy.
Also driving up prices was Canadian retail sales data published with declining readings for April, dampening the CAD’s strengthening.
However, investors are still seeing a bearish signal for a bearish trend as the price is still moving below the Moving Average 50 (MA50) barrier level in the 1 hour time frame of the price movement on the USD/CAD chart.
It is likely that if the bearish pattern is maintained, the price is expected to continue declining towards the RBS zone (resistance become support) around 1.21800.
The lower decline beyond the zone will head back to the support zone at 1.20500 which has managed to curb the price fall in last May's trading.
However, if the decline ends and the price resumes the rise as it did last week, the rise will be expected to test the 1.24000 resistance first before heading back to the 1.24700 resistance zone.
