The Canadian dollar traded firmly in the New York session yesterday as investors focused on the outcome of the Canadian central bank's monetary policy meeting.
In line with forecasts, the Bank of Canada (BOC) has raised interest rates more aggressively by 75 basis points from 2.50% to 3.25% in an effort to combat price surges.
This has led to a strengthening of the Canadian dollar currency in the market which is taking advantage of the US dollar depreciation situation in the market.
Even so, investors remain cautious about the strengthening of the Loonie dollar following the drop in crude oil prices in the market will limit the excellent performance displayed yesterday.
Investors are also cautious ahead of the Canadian jobs data report which is due to be published on Friday tomorrow as the curtain closes on the end of the week.
Examining the price movement on the chart of the USD/CAD currency pair, the price was seen to test the resistance level at 1.32000 yesterday and like the situation last week, the price still failed to break through it and showed a decline again.
The price decline until the end of the New York session almost reached the level of 1.31000 after the signal of a change in the bearish trend was re-evaluated after the price fell back below the barrier level of the Moving Average 50 (MA50) on the 1-hour time frame on the USD/CAD chart.
Continuing trading on Thursday, the price is still hovering above the RBS (resistance become support) zone of 1.31000 until trading in the European session.
Further declines can be expected after the price breaks below the RBS zone with a target to head up to around 1.30000.
For a lower decline, the 1.29000 zone is seen to be the focus if the US dollar continues to trade weakly against the Loonie.
On the other hand, if the price successfully bounces back, the resistance at the height of 1.32000 will again be tested until the price manages to break through it.
The latest 2-year high will be noted for a continued rally with a target to reach up to 1.33000.
