WTI crude oil has certainly impacted the Canadian dollar in recent sessions, sending it south against the greenback. This week’s correction and test of the $55.00 level for crude has brought the energy bears out of retirement. If energies continue to experience pressure, the Canadian dollar may be in a weak position against the USD.

USD/CAD Technical Outlook

Currently, the USD/CAD is trading within a make-or-break technical area. On the daily timeframe, we are seeing very tight rotation within Wednesday’s range.

USD/CAD, Daily Chart

Here are the key levels for the remainder of today’s U.S. session:

• Resistance(1): Daily SMA, 1.2743

• Resistance(2): 38% retracement of current wave, 1.2761

• Support(1): 38% retracement of yearly range, 1.2722

• Support(2): 20 Day EMA, 1.2707

• Support(3): Bollinger MP, 1.2697

Bottom Line: Price is currently trading in the vicinity of the Daily SMA, 1.2743. With such a tight range between support and resistance levels, a rotational approach is the best way to engage this market:

• 1:1 R/R longs from downside support at 1.2707, initial stop at 1.2694

• 1:1 R/R shorts from topside resistance at 1.2761, initial stop at 1.2777

As long as this market remains range bound, mean regression plays toward the Daily SMA is a solid plan for the rest of the U.S. session.

As always, trade smart and keep a close eye on your leverage!