The Canadian dollar is a sensitive currency to the development of the global crude import market as crude oil is a major export in Canada.
The meeting of allied petroleum exporting countries (OPEC+) this week has agreed to go ahead with plans to increase oil production and is optimistic that the market will be able to absorb additional offers.
Thus, the increase in supply will lower the price of crude oil as well as affect the depreciation of the Canadian dollar.
But the latest report is seen again contributing to the resurgence of crude oil prices amid concerns over production disruptions in the Gulf of Mexico.
Thus the price movement on the chart of the USD/CAD currency pair displays a decline indicating the Canadian dollar is more dominant against the US dollar.
In addition, investors are wary of the movement of the US dollar which is expected to continue to weaken with the attention given to the US NFP employment data report that will be published in the New York session soon.
Thus, the US dollar is actually more losing its strength in addition to being ‘hurt’ by Federal Reserve (Fed) Chairman Jerome Powell’s dovish speech at the Jackson Hole conference during the day.
After the price was seen falling below the support zone of 1.26000 yesterday, the price fell lower and flattened at the zone of 1.25500 until trading resumed into the beginning of the European session today.
The forthcoming lower decline is seen to test some concentration levels before reaching the support zone around 1.24000.
If a rise occurs and re -passes the 1.26000 zone, the initial signal of the bullish trend change will return expecting a higher price rise again.
The initial resistance at 1.27000 will be tested first for the price to continue rising to the level of 1.28000 if the latest market sentiment starts to change the direction of the price movement.
