Higher WTI crude oil prices and a dovish Fed have the USD/CAD testing multiyear lows. At press time (about 2:00 PM EST), the Loonie is down 8 pips (-0.07%) on the session. If this pair settles in the red on Friday afternoon, it will be the fifth-consecutive losing week for the USD/CAD.

As we approach the peak oil demand summer season, WTI crude oil futures are trading firmly above the $64.00 handle. Today, June WTI futures are up nearly $1.00 and closing in on $65.00. With only a few weeks until the Memorial Day weekend, it appears as though $75.00 crude oil by July 4th is a probable scenario.

On the American economic news front, the ISM Manufacturing PMI (April) came in at 60.7, beneath expectations (65.0) and the previous release (64.7). This is a dismal figure and the first poor number we have received in quite some time. However, U.S. stocks haven’t been phased as the DJIA is trading above 34,000. 

To sum things up, the picture is bearish for the USD/CAD. Higher oil prices and lagging U.S. manufacturing are playing against the Greenback. Factor in last week’s dovish Fed statements and a test of 1.2000 in the coming weeks isn’t out of the question.

USD/CAD Continues To Lose Ground

For more than a month, it’s been all selling for the USD/CAD. As a result, two interesting technical levels are quickly coming into play.

Here are two areas to watch in the coming week(s):

• Support(1): 2018 Low, 1.2247
• Support(2): 2017 Low, 1.2061

Bottom Line: It will be fascinating to see how the USD/CAD fares at 2018 and 2017’s lows. For now, I have buy orders in the queue from 1.2254. With an initial stop at 1.2219, this counter-trend trade produces 35 pips on a 1:1 risk vs reward ratio.