The Canadian dollar is currently seen as having the advantage of strengthening in the market after being influenced by the development of the global crude oil market.
It was recently reported that Saudi Arabia and Russia will continue to reduce their crude oil production until the end of this year.
Thus, this has been a factor in the surge in oil prices yesterday and the Canadian dollar gained positive momentum as crude oil is Canada's main export.
However, investors should be cautious ahead of the central bank of Canada's (BOC) policy meeting in the New York session tonight.
The BOC is expected to keep interest rates unchanged at 5.00%, and if the central bank's follow-up statement is dovish, the Loonie is at risk of weakening.
The price chart of the USD/CAD currency pair on Tuesday yesterday saw a jump to the latest 4-month high around 1.36700 as the US dollar showed its strengthening again.
However, in the New York session, the price decreased again with the strengthening of the Canadian dollar which pushed the price to around 1.36000.
However, the price failed to continue the decline lower and bounced back to around the 1.36400 level at the close of the New York session.
The price movement is still above the support of the Moving Average 50 (MA50) on the 1-hour time frame on the USD/CAD chart, giving the impression of a bullish trend.
If the rise continues to higher levels, the price will overcome the highs reached yesterday to record the latest highs.
The target is to head up to the 1.38000 zone after the last time the price touched it in the last March trade.
However, if the price makes a drop below the MA50 level, it will be an early warning to investors for the impending price drop.
The price drop can be targeted to the 1.35000 level for the price to test the support zone that has previously been in focus several times.
