The rebound in crude oil prices is seen to have an impact on the movement of the Canadian dollar which is sensitive to the oil market.
Developments in Europe, Germany is no longer opposed to Russia’s previous oil embargo measures and the report is seen to push pressure on oil supplies mixed with volatile crude oil market sentiment.
The German Economy Minister has also announced to find a new solution to replace the Russian oil supply.
This factor is seen to give an expectation of the probability for a change in the price direction on the chart of the USD/CAD currency pair.
Previously, prices were seen to have been driven higher due to the strengthening factor of the US dollar in the market ahead of next week’s FOMC meeting with expectations of a 50 basis point rate hike by the Federal Reserve (Fed).
While oil prices continued to decline earlier, the Canadian dollar also weakened pushing prices to a 7 -week high until Thursday's trading.
After the price reached a high of around 1.28800 towards the opening of the New York session yesterday, a decline was exhibited throughout the New York session up to the level of around 1.27900.
The drop below the Moving Average 50 (MA50) barrier level on the 1 -hour time frame on the USD/CAD chart again gives an early signal for a change in the bearish trend.
The continued decline in the Asian session today (Friday) tested the RBS (resistance become support) zone at 1.27700 to complete the price correction pattern on the previous bullish trend movement.
If the rebound continues, the resistance zone at 1.29000 will be the focus to be tested after the bulls overcame the high reached yesterday.
And for the next rise, the target is at the height of 1.3000 after overcoming the resistance zone in December 2021 which is at 1.29600.
On the other hand if a lower decline occurs, the RBS 1.26700 zone will be priced for a clearer bearish trend.
The continued decline is seen to test the previous focus level around 1.26000.
