The USD/CAD Is In Rotation Ahead Of Oil Inventories

After a slow Monday on the markets, things appear ready to open up for the Tuesday session. Commodity pricing is showing early weakness, with both gold and WTI crude looking to rebound from recent bearish trends. The U.S. indices are also likely to move as the much-anticipated Trump/Putin meeting in Helsinki is now in the books.

The big event on the docket for today is the speech of U.S. FED Chair Jerome Powell due out at 10:00 AM EST. Powell is addressing Congress in his semi-annual Monetary Policy Report. Be on the lookout for verbiage regarding the 2.0% FED inflation target rate being exceeded. Also, the labor market will be thoroughly addressed, as U.S. Unemployment has made a surprise return to 4.0%.

As always, if any forex-shattering comments are made by Powell, we will break down what they mean to today’s markets and pass along any trade ideas that may arise.

USD/CAD Technicals

The recent slide in WTI pricing has not been kind to the Canadian dollar. However, last week’s hawkish move from the BoC has helped the Loonie hold its own against the USD.

At press time, the USD/CAD is breaking toward the 1.3200 handle. There is a key level of resistance at the Bollinger MP just ahead of this level. A possible trade may set up if price continues to rally.

Bottom Line: With WTI crude prices showing early weakness, the USD/CAD is likely to rally toward that 1.3200 topside level. A short from the Bollinger MP at 1.3196 is a quality scalping entry to the bear. This is a counter-trend play, so a modest profit target of 8-12 pips is ideal using a 1:1 risk vs reward scenario.