As expected, the Canadian dollar extended its strengthening this week following the outcome of a Canadian central bank policy meeting that came into focus yesterday.
The Bank of Canada (BOC) fulfilled its forecast to raise interest rates by 50 basis points to 1.00% following in the footsteps of most other major central banks that continued their monetary policy tightening measures.
In addition, the Canadian dollar was also supported by the resurgence of crude oil prices in the market due to crude oil being the main export in Canada.
On the price chart of the USD/CAD pair yesterday, the price has plunged more than 100 pips following the reaction of investors to the results of the BOC meeting.
Earlier, the bulls had reached the high of 1.26700 testing the resistance zone before the price plunged and gave an early signal for a bearish trend change after the price moved back below the Moving Average 50 (MA50) barrier level on the 1 -hour time frame.
After the decline passed the support level at 1.26000, the price has slipped to the zone around 1.25600 at the end of the New York session and remained hovering in that zone until trading resumes the European session this afternoon.
If the situation continues, the decline will reach a level around 1.25000 or lower, can lead to support at 1.24000.
On the other hand if the price tries to display a rebound, the initial resistance that will be tested by the price is at 1.26000.
A successful continued higher rise will retest the highs reached yesterday at the 1.26700 zone before reaching the latest highs.
