WTI Crude Rallies, USD/CAD Enters Consolidation

With only a few hours left in the forex session, the USD/CAD is trading in a non-committal technical area.

Shain Vernier•Monday, February 8, 2021•2 min read

It’s been a big session for WTI crude oil as bidders are dominating the action. March WTI futures are up nearly $1.10 on the day, with prices posting a high in the vicinity of $58.00. Typically, strong oil prices send the USD/CAD south; that hasn’t been the case today. The Loonie is holding in a tight consolidation pattern near 1.2750.

On the forex news front, there aren’t a whole lot of headlines to be had. The markets are relatively quiet as no primary market drivers were scheduled for today. However, Cleveland Fed President Loretta Mester has issued a few public comments. The key talking points reiterated the Fed’s current stance:

COVID-19 vaccinations could boost recovery
Economic performance is largely sectoral, with the recovery being uneven
The Fed will remain accommodative
A return to maximum employment is quite a ways off

All in all, this morning’s comments from Mester are more of the same from the Fed. Unlimited QE and dovish policy are the way forward ― barring a major uptick in economic activity, the Fed is going to remain dovish throughout 2021.

As we head deeper into Q1 2021, the fundamentals for the USD/CAD point to bearish price action. Let’s take a look at the daily technicals and see what this week may hold for the Loonie.

USD/CAD Firm After Friday’s Plunge

With only a few hours left in the forex session, the USD/CAD is holding firm. Rates are in a noncommittal area between the Daily SMA and Bollinger MP.

Here are the key levels to watch as we roll toward Tuesday’s session:

Resistance(1): Daily SMA, 1.2765
Resistance(2): 38% Current Wave, 1.2669
Support(1): Bollinger MP, 1.2741

Overview: Right now, the Loonie is extremely quiet. However, be on the watch for a directional move from this pair later in the week. If price takes out the Bollinger MP in the next 24 hours, we could be in for a bearish breakout beneath 1.2700 ahead of Wednesday’s EIA crude oil inventories report.

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ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.