Thus far, WTI futures rollover has been good to the Canadian dollar. Bullish price action is evident in July WTI crude oil, with prices in the neighborhood of $63.50. Given Canada’s recent economic challenges and the questions surrounding USMCA, any potential upside in the oil market is good news for USD/CAD bears.

USD/CAD: Technical Outlook

For almost the entirety of May, the Loonie has rotated between 1.3500 and 1.3400. Daily price action has been choppy, resulting from a relative stalemate at 1.3450. It is still anyone’s ballgame, but it appears the bears are gaining a slight upper hand today.

Here are the levels to watch for the remainder of today’s session:

• Resistance(1): Bollinger MP, 1.3437
• Resistance(2): Daily SMA, 1.3455

Overview: Two things are going to move the USD/CAD this week ― the FOMC Minutes and WTI pricing. Nonetheless, be on the lookout for some short-term volatility surrounding Wednesday’s Canadian Retail Sales (March) release. Analysts expect this number to increase from levels seen in February. If they do not, rates very likely remain near 1.3450.

At the present moment, this market is a tough one to trade. Until we see pricing break from the 1.3400-1.3500 area, a reversion-to-the-mean strategy is ideal. So, buying 1.3400 and selling 1.3500 with tight stops isn’t a bad way to get in on the action.