Crude oil prices that displayed gloom after reaching record highs have caused the Canadian dollar to plummet slightly and then provided an opportunity for the USD to strengthen.
Investors are expected to await the publication of the report of the Bank of Canada (BOC) policy meeting in the New York session (Wednesday) to see a clearer direction on the implementation of the 'tapering' measure.
This aspect will also indirectly be a major factor to show the BOC taking steps in implementing policy tightening in times of increasing inflationary pressures.
Examining the USD/CAD currency movement chart, the price movement trend is seen to see an attempt in testing the 1.23000 support zone before being ‘kicked’ again to get back on track.
The increase that was highlighted has also recorded an increase to test the SBR zone (support become resistance) 1.24000 and give the impression that it is making a ‘rising wedge’ pattern.
The price action also seems to have risen above 100 pips and is still trading and moving above the Moving Average 50 (MA50) barrier level if witnessed on the 1 hour time frame.
If the bearish trend of the price is shown again, the price movement is likely to re -decline to once again hit the support zone of 1.23000 before the expectation for a more severe decline.
The lower decline breaking the support zone is expected to record the latest 4 -month low of 1.22000 last reached in the June trading session.
Meanwhile, if the price manages to pass the SBR zone of 1.24000, the more aggressive surge momentum for the initial signal to continue the bullish trend will see the price reach the next SBR zone at 1.25000.
