It has been a wild 48 hours for the Loonie. After a steep downtrend amid yesterday’s FED announcements, the USD/CAD is attempting to make a comeback. Fueled by a drop in WTI crude oil to under $65.00, the early 2018 bullish trend remains intact. Several downside support levels have caught some bids and driven this market slightly into the green.

The EIA crude oil inventory report from Wednesday has shaken up the oil markets. On the news of there being a draw of over 2.5 million barrels, energy traders jumped into the long side of the WTI crude market. The result was a bump for the Canadian dollar and a downtrend for the USD/CAD.

USD/CAD Technicals

The Loonie is one of my favorite targets on the forex. Its market fundamentals are fairly straightforward, with U.S./Canada trade and oil values often driving the train.

Earlier, the USD/CAD tested several key areas of downside support. They held firm and a Doji formation on the daily chart may set up on today’s close. Here are the levels to watch for the remainder of the session:

• Support(1): Bollinger MP, 1.2861
• Support(2): Daily SMA, 1.2822
• Support(3): 38% of 2018’s Range, 1.2790

Overview: At press time, it appears that price is determined to grind higher and close above the 1.2900 handle. Current price action is in line with the intermediate-term trend for 2018. As long as trade stays above the macro 38% retracement at 1.2790, my bias will remain to the long.

Upcoming events will sway this market greatly. BoC official Carolyn Wilkins is due to speak at 2:45 PM EST. In addition, tomorrow’s Canadian CPI and Retail Sales numbers will drive this market directionally. If you are holding open positions in the USD/CAD, be sure to keep your eye on the news feed and manage risk accordingly.