The USD/CAD has been on a rollercoaster today, with rates responding to a significant rally in WTI crude oil. For the session, the USD/CAD has put in a vicinity test of the 1.3100 handle before rallying back toward 1.3150. While the price action is certainly choppy, participation is strong and public interest is high.

Two key market drivers are currently at work vs the Loonie: Canadian GDP and WTI crude oil pricing. September WTI crude futures have finally broken from their slumber, posting a 24-hour rally of more than $1 per barrel. In addition, Canadian GDP (MoM, May) beat expectations (0.1%), coming in at 0.2%. When you add it up, the early session was a good one for the Loonie vs the Greenback.

Of course, the market dynamic will be shifting at 2:00 PM EST with the FED’s Monetary Policy Statement. At least for now, the intermediate-term bearish trend remains intact for the USD/CAD.

Whipsaw Conditions For The USD/CAD

No doubt about it, the Loonie has put on a show today. With a little under three hours until the FED speaks, it is anyone’s guess where the action will end up.

Here are the levels to watch going into the FED:

• Resistance(1): Macro Wave 38% Retracement, 1.3175
• Support(1): Daily SMA, 1.3109

Bottom Line: Following rejection of the Daily SMA (1.3109), the USD/CAD is driving toward the 38% Macro Retracement level (1.3175). If the bounce continues, joining the intermediate-term bearish trend from 1.3175 isn’t a bad idea. Until elected, I will have sell orders in the queue from 1.3172. With an initial stop loss of 1.3209, this trade produces a tidy 25 pips on a sub-1:1 risk vs reward management plan.

If you are going to take this trade recommendation, realize it is high risk due to the super-charged news cycle. Be sure to have your stops down and leverage in check!