Today’s action on the U.S. equities markets has overshadowed many prominent forex pairs. The USD has hung in there against most of the majors, with mixed participation being the order of the day. The greenback’s recent strength against the Canadian dollar has slowed considerably.

With the week’s crude oil inventory cycle kicking off this afternoon, the Loonie may be ready to move in the coming 24 hours. For an idea of where we may be headed, let’s dig into the technicals.

USD/CAD Technical Outlook

After a considerable bull run over the last two sessions, the USD/CAD is showing signs of consolidation. If price closes near present levels, formation of a Doji on the daily chart is possible.

The upcoming API and EIA crude oil inventory reports have the potential to sway participation levels greatly. The API release came in at 3.229 million barrels for last week and experts are predicting the EIA report to be in the neighborhood of 2.860 million. It is anyone’s guess how these numbers will pan out, but no monumental surprises are likely.

Pricing of the USD/CAD has broken above resistance and is currently trading in a relative no man’s land. There are two levels that I will be watching for the near future:

• Resistance(1): Psyche level, 1.2600
• Support(1): 38% Dec. High/Feb. Low, 1.2505

Overview: The upper Bollinger Band is converging with the 1.2600 handle. This lends credence to the psychological level acting as topside resistance. The 38% macro retracement (1.2505) is setting up as primary support. The intrasession low at 1.2503 confirms its validity.

If the coming oil reports do not drive this market directionally, we will be in for a prolonged consolidation phase. It is too early to tell, but a rotational trading plan for later this week may be a solid way to engage this market.