Monday’s sell-off in WTI crude oil drove participation to the Loonie. The result was a 54 pip session rally in the USD/CAD amid the plunging energy prices. Although today has brought a tight oil market, traded volumes have been heavy. The bulls and bears have fought it out over $55.50-$56.00 in April crude futures, with the result being a relative stalemate.

As we talked about on the Wall Street open, today’s forex session is going to be dominated by FED Chairman Jerome Powell’s Congressional testimony. Thus far, not much has come across the newswires, yet the USD is faltering a bit.

One statement from Powell that has made a few headlines was that the “U.S. economy is sending mixed signals.” Not much has happened in the markets in response, but this notion certainly backs up the FED’s policies of “flexibility” and “patience.”

USD/CAD Technical Outlook

After a strong overnight, the USD/CAD is fading as the U.S. session wears on. Rates are well off of intraday highs, giving back most gains.

Here are the resistance levels to watch for the remainder of the session:

• Resistance(1): 38% Retracement, 1.3222
• Resistance(2): Bollinger MP, 1.3222
• Resistance(3): Daily SMA, 1.3234

Overview: The longer that Jerome Powell talks, the worse it appears to be getting for the Greenback. It looks like today’s testimony is reinforcing the FED’s adopted dovish tone. For the moment, stocks are on the rebound and the USD is falling.

Bearish sentiment is beginning to dominate the USD/CAD. In the event we see April WTI break above $56.00, then the Loonie will continue to erase recent losses vs the Greenback.