The Canadian dollar traded gloomy towards the end of the week after the outcome of the central bank meeting that did not meet market expectations.
The Bank of Canada (BOC) has increased interest rates by 50 basis points to 3.75% from 3.25% making the increase lower than the previous expectation of 75 basis points.
Thus, the strengthening momentum of the Canadian dollar that has been displayed since last Tuesday started to fade when the BOC signaled a less aggressive policy tightening even though rate hikes continued for six consecutive meetings.
However, the Loonie still has the potential to move well against the US dollar which continues to experience a phase of depreciation throughout this week's trading.
Assessing the price movement on the chart of the USD/CAD currency pair, a downward pattern continues to be displayed until reaching around 1.35100.
There was a surge displayed during the reaction to the results of the BOC meeting in the New York session yesterday to a height of 1.36500, but bounced back down after testing the SBR (support become resistance) zone.
The flat price movement at the end of the New York session continued into the Asian session this morning (Thursday) around 1.35500.
Still moving below the Moving Average 50 (MA50) barrier level on the 1-hour time frame on the USD/CAD chart, it remains a signal for price to maintain movement in a bearish trend.
But the decline in prices is likely to be slower after the Canadian dollar lost momentum following the reaction to the BOC meeting.
The price decline if continued is seen to test the 1.35000 support zone before extending the decline lower to around 1.34000.
Hitting that level will mark the latest low for the price for the 5-week trading period.
However, if the price fails to break through the 1.35000 zone and bounces back like the movement pattern in early October, the SBR 1.36500 zone will once again be tested before the trend change signal is evaluated by investors.
The continued rise has the potential to reach a high at the 1.38000 resistance zone which was the focus tested several times during last week's trade.
