Forex conditions are relatively tight across the majors. Smaller than average ranges are the rule for many pairs, especially the USD/CAD, USD/CHF, and the AUD/USD. However, we have seen decent action in the EUR/USD and USD/JPY. Perhaps these markets will open up a bit as we near the midway point of the trading week.

For the USD/CAD, today’s market is exceptionally tight. A modest 43 pips is the session range, with price rotating around the 1.3150 handle. Like all things trading, this situation is likely to change in coming hours. A release of the weekly WTI crude oil inventories reports may act as a catalyst for a move in the Loonie.

USD/CAD Technicals

During the U.S. premarket hours, Canadian Housing Starts (YoY, August) were released. The number came in at 201K, well below the previous report (205.8K) and projections (201.0K). While only a secondary economic metric, the lagging housing data certainly hasn’t done the Loonie any favors.

Bottom Line: As long as the current swing high (1.3226) remains the high-water mark of the current wave, then a buying opportunity may set up for later this week.

Until Friday’s close, or until the current swing high is taken out, buy orders from just above the 38% retracement from 1.3097 are solid entry to the bull. Using a standard 1:1 risk vs reward and an initial stop loss at 1.3049, this trade produces 48 pips on a return to the current value area (1.3150).

With a bit of luck, this trade will go live ahead of the late-week U.S. CPI and Retail Sales reports. If so, be sure to check out the Comments section at the bottom of this page for trade management ideas.