The Canadian dollar showed a reaction after a statement from Saudi Arabia which warned that the Organization of the Petroleum Exporting Countries (OPEC) could reduce crude oil production.
Following the recent drop in oil prices, Saudi Arabia's oil minister, Prince Abdulaziz bin Salman, said that OPEC is ready to reduce production to accommodate the drop in oil prices.
The move was caused by the market ignoring very tight physical crude oil supplies in addition to poor liquidity in the futures market and concerns over the risk of a recession.
While the US dollar currency is affected by the expectation of the Federal Reserve (Fed) to make an increase of 75 basis points at the meeting in September, but investors remain alert for the Fed's choice which is likely to slow down interest rate hikes.
In addition, investors are looking forward to the publication of manufacturing and services data (PMI) of the United States (US) at the New York trading session today, which will measure the current development of the US economy.
Monitoring the price movement on the chart of the USD/CAD currency pair at the beginning of Monday week yesterday, the price was seen moving horizontally testing the 1.30000 barrier level from the Asian session to the European session.
However, more aggressive price movements continued in the New York session, seeing a surge break through the 1.30000 barrier until reaching the latest high level at 1.30600.
However, the momentum of the increase failed to continue after the statement by the oil minister of Saudi Arabia which made the price show a decline in the Asian session due to the advantage in the Canadian dollar currency.
The price was seen to show a slight increase at the beginning of the European session but plunged again towards the 1.3000 level which was seen as a support level when making the price.
The price drop also tested the Moving Average 50 (MA50) support level on the 1-hour time frame on the USD/CAD chart which investors will evaluate for further price movement indications.
If the price breaks lower past the MA50 support level and also the 1.3000 zone, a lower decline will be expected after the initial signal of the bearish trend change.
The price that makes a lower decrease will shrink to the RBS (resistance becomes support) zone of 1.29000 before the decrease continues towards around 1.2700.
On the other hand, if the price manages to resume the increase, it is seen that the price will go to the resistance zone at 1.31000 after overcoming the high level reached previously at 1.30600.
For a higher rise, the next target is seen to be around 1.32000 for the price to re-challenge the highs reached last July as well as record the latest 6-week highs.
