The Loonie has been in a tight consolidation phase all session long. USD/CAD rates are hovering just above 1.3110 and appear to be in no hurry to leave. Given the rapidly approaching crude oil inventories cycle, we may be in for a move in the coming 24 hours.

Crude Oil Inventories On Deck

As a general rule, the Loonie sees an uptick in activity around the weekly API and EIA crude oil inventories reports. Perhaps this week’s figures will bring some action ahead of the July 4th U.S. holiday break. 

Last week, the API Crude Oil Stocks report came in extremely negative at -7.55 million barrels. The EIA report followed suit, shattering projections at -12.788 million barrels. This week’s supply figures are going to be important for WTI and the Loonie. If we see another large draw on supply, the USD/CAD will be in a position to fall in conjunction with a break above $60.00 in WTI crude.

A Slow Session For The USD/CAD

Monday brought significant bullish action to the USD/CAD. Today has exhibited a cease to the bidding amid much slower forex conditions. 

Here are two levels to watch as the week unfolds for the Loonie:

• Resistance(1): 38% Current Wave Retracement, 1.3201
• Support(1): Swing Low, 1.3059

Bottom Line: Until we see a bullish move above 1.3200, the USD/CAD will remain in a downtrend. Given the fundamentals facing WTI and the USD, going short from beneath the 38% Fibonacci level (1.3201) is a premium trade location with the trend.

As long as the Swing Low (1.3059) remains as the intermediate-term bottom in this market, I will have sells in the queue from 1.3189. With an initial stop at 1.3226, this trade produces 35 pips on a slightly sub-1:1 risk vs reward management plan.