As of last week, the Canadian dollar continued to trade weakly, falling to a fresh 8-week low against the US dollar, as lingering concerns about slowing economic growth in the country gave the US dollar more room to dominate.
However, a slight recovery was shown in the movement of the Canadian dollar earlier this week ahead of the Bank of Canada (BOC) monetary policy meeting with the expectation that the central bank will make another aggressive rate hike to control inflation which is at a high level.
It is expected that the BOC will increase the rate by 75 basis points which will make the cost of borrowing at 3.25%.
However, the Canadian dollar failed to gain as it was affected by the outcome of the meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) which agreed to reduce crude oil production by 100,000 barrels per day from October.
To evaluate the price movement on the chart of the USD/CAD currency pair, the price is seen to have reached the latest 7-week high on Thursday and touched the resistance level of 1.32000.
And continuing at the opening of the Asian trading session earlier this week yesterday, prices failed to overcome the highs reached last week and fell to close the end of the New York session around 1.31400.
The decline continued at the opening of the Asian session this morning (Tuesday) with the price moving down below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the USD/CAD chart testing the RBS (resistance become support) zone of 1.31000.
If the price continues to decline lower, the price will break through the 1.31000 zone and can go up to the next concentration level around 1.30000.
An extended decline is likely to reach the 1.29000 zone to record a fresh 2-week low if the US dollar remains weak against the Canadian dollar.
However, it is expected that prices can continue to rise again if the release of US service sector data from the ISM survey records encouraging readings and provides increased support for the US dollar currency.
For the expected price increase, the jump from the RBS 1.31000 zone is seen to retest the high level reached last week at the resistance level of 1.32000.
Continuing the rise to higher levels beyond that level, the price will record a recent 2-year high with the next target to reach 1.33000.
