Bullish sentiment has dominated trade of the USD/CAD this week, driving a rally of more than 100 pips. The steep downtrend of early June is being challenged; WTI crude has yet to find solid ground and the Greenback is posting gains across the majors. For the moment, it appears as though the USD/CAD is on a collision course with 1.3400.

In total, this week’s economic data facing the Greenback has not been strong ― CPI lagged, Retail Sales came in mixed, and the UM Sentiment Index fell. However, currency players have chosen to ignore the fundamentals and are buying back the USD. In the case of the USD/CAD, depressed WTI crude oil is a primary reason why.

A Big Week For The USD/CAD

In a Live Market Update from Tuesday, I issued a short trading plan for the Loonie. The recommendation generated some nice gains (depending on your broker’s fills!) of about 35 pips. Nonetheless, the daily downtrend is weakening and may be drawing to a close.

Here are three daily resistance levels to watch for the near future:

• Resistance(1): Daily SMA, 1.3390
• Resistance(2): Bollinger MP, 1.3416
• Resistance(3): 62% Current Wave, 1.3441

Overview: Today’s bullish breakout in the USD/CAD has been a surprise. Rates are challenging the Daily SMA at 1.3390 and are looking to press higher. If this market settles above 1.3400, we may get a Monday or Tuesday shorting opportunity from the 62% Current Wave Retracement (1.3441).

For now, it is best to stay out of the way of the intraday bulls until the dust settles a bit.