It has been a wild day on Wall Street, led by whipsaw trade in the U.S. indices. By comparison, the USD/CAD has been tame, posting a modest 41 pip range. Following the massive trend day up of Wednesday, the lackluster action in the Loonie is a bit surprising.

However, there are two good reasons for the tight trading range: the lagging U.S. ISM Non-Manufacturing PMI and plunging WTI crude oil pricing. These factors have largely canceled each other out, prompting rotational trade in the USD/CAD. Let’s dig into the daily technicals and see what may be in store for late-week trade.

USD/CAD Enters Consolidation

At this hour (12:20 PM EST), the USD/CAD appears to be taking a nap. WTI crude is trading in the vicinity of $52.00 and U.S. equities sentiment is rebounding from the early-session ISM release. 

For now, a bullish bias is warranted toward this pair. Rates have not yet retraced 38% from Wednesday’s breakout; until this occurs, the long side of this market is ideal. In the event a reversal develops in the coming 24 hours, there are two support levels worth watching:

• Support(1): Daily SMA, 1.3267
• Support(2): Bollinger MP, 1.3251

Bottom Line: Right now, it is WTI crude oil prices vs FED rate cuts for the USD/CAD. In the event WTI finds stability and tomorrow’s U.S. Non-Farm Payrolls disappoint, a long trade may set up in this market. Until Friday’s closing bell, I will have buy orders in queue from 1.3272. With an initial stop at 1.3244, this trade produces 30 pips on a slightly sub-1:1 risk vs reward ratio.