Expectations for the price on the chart of the USD/CAD currency pair to decline lower apparently faltered as the market saw an energetic price spike in the European session yesterday.
What has happened?
Risky market sentiment focusing on the global economic downturn re-strengthened the US dollar as a safe-haven currency in the market.
In addition, the global crude oil market also received a bad temper with oil prices experiencing the biggest daily fall since March.
Concerns were also added when the Covid-19 test was held on a large scale in China which triggered the risk of closing the Chinese economy which is one of the largest consumers of oil in the world and will affect oil demand.
Thus, the Canadian dollar has been severely affected as crude oil is Canada's main export commodity.
Investors were shocked by the surge on the USD/CAD chart yesterday with a surprise daily rise of over 200 pips recorded thus extinguishing expectations for the price to resume the previous bearish pattern.
After the surge passed the resistance at 1.29000, the rise continued and passed the next resistance at 1.3000.
Not stopping there, the rise continued again until reaching a high of 1.30800 to retest the resistance zone reached on June 17.
Towards the end of the New York session, the price slightly eased back to the level of around 1.30200 before a weak rise was exhibited in trading that continued into the Asian session this morning (Wednesday).
The higher upside is expected to continue to break the resistance zone of 1.31000 and the price will record the latest high for 2 years.
The target for the next rise is likely to reach up to the level around 1.32000.
As for the expectation of a resumption of price declines, the initial support level is seen at 1.3000 and the continued lower decline will head back to the 1.29000 focus zone.
