Crude oil prices recorded a further decrease in trading today (Wednesday) following the expectation that several interest rate hikes by the central bank will be implemented this week.
The Reserve Bank of Australia (RBA) first kicked off the situation when it raised interest rates by 25 basis points on Tuesday, surprising the market as expectations for the central bank to keep rates on hold.
The main focus is the FOMC meeting early Thursday morning where the Federal Reserve (Fed) is expected to raise interest rates by 25 basis points.
Similarly, the European Central Bank (ECB) is seen to raise the rate by 25 basis points to 3.75%.
Therefore, the implementation of the rate increase is seen to encourage the economic movement to slow down as well as have a decreasing effect on global crude oil demand.
This followed Chinese manufacturing and services PMI data published over the weekend showing dismal figures, expecting slower demand by the world's biggest oil consumer.
This situation has also had a depreciating effect on the Canadian dollar as crude oil is Canada's main export.
It can be observed on the chart of the currency pair USD/CAD yesterday, the price has surged to make an increase compared to the horizontal movement of the previous day.
The price made an increase starting from the level of 1.35300 to reach a height of around 1.36300.
The increase has also crossed the Moving Average 50 (MA50) barrier on the 1-hour time frame on the USD/CAD chart, which triggers expectations of a bullish trend change.
The continued rise is seen to test the 1.36500-1.36700 resistance zone that was tested in last week's trade but has not yet been breached.
If successful, a higher increase is seen to lead to the next target which is at 1.38000.
However, if the rising pattern fails to be maintained and instead the price plunges back down, the RBS (resistance becomes support) zone at 1.35000 will be tested and investors will evaluate the price reaction in that zone.
If the price continues to crash down, the price can reach the concentration level of 1.34000 or go to the support level of 1.33000.
