The Canadian dollar still maintained a positive movement earlier this week after successfully strengthening last week supported by global crude oil market sentiment.
The prospect of rising fuel demand and rising vaccination rates is seen to re -support the rise in the price of crude oil which is Canada’s main export thus influencing the Loonie movement to strengthen.
With the US dollar depreciating factor earlier in the week it will continue to open room for the Canadian dollar to continue its strengthening while investors remain cautious ahead of the Canadian second-quarter inflation data report on Wednesday.
On the chart of the USD/CAD currency pair, the price has plummeted last week from the high level of 1.27800 to the level of 1.25300.
Continuing up to trading earlier this week, the price showed a horizontal movement in the zone around 70 pips above the level of 1.25300 with the resistance level being at 1.26000.
The initial signal for a lower price decline was seen yesterday after the price moved below the Moving Average 50 (MA50) barrier level on the 1 -hour time frame as a bearish signal.
The continued decline will test the important zone around 1.25300 to 1.25700 before the expectation of a lower decline will head to around 1.24000.
On the other hand if the price manages to get out of the horizontal zone and passes the resistance of 1.26000, a higher rise will retest the previous focus levels.
The level around 1.26700 will be tested first before the price returns to last week's resistance zone at 1.27800.
