The Greenback is on the ropes once again, slipping versus the majors. At press time, the EUR/USD (+0.24%), USD/CAD (-0.05%), and USD/CHF (-0.18%) are all trending against the dollar. However, commodity prices are down, led by WTI crude oil (-0.40%), corn (-0.92%), and soybeans (-1.01%). To say the least, the markets are conflicted to open the second trading week of June.

Today’s action in WTI crude oil has certainly been interesting. For weeks, it has appeared that WTI has been on a collision course with $70.00. Earlier, $70.00 was officially tested and defended by sellers. The $70.00 handle will be a key area for both the USD/CAD and WTI crude; if it’s taken out, get ready for a quick run to $72.50 or $75.00. In my opinion, we will see WTI print $74.50-$75.00 by the July 4th holiday. If this occurs, then the USD/CAD will be in a position to drive well beneath the 1.2000 handle. In fact, a test of January 2015’s low of 1.1613 may be in order.

On the U.S. economic news front, this morning’s calendar was vacant. However, Tuesday brings April’s U.S. trade balance figures, JOLTS Job Openings, and the weekly API crude oil stocks report. For traders of the USD/CAD, all eyes will be on the API number. If the API falls beneath last week’s -5.360 million, then WTI will likely catch some bids and send the Loonie south.

Can The USD/CAD Take Out 1.2000?

Bottom Line: Given the summer seasonality of WTI crude and an already weakened USD, the USD/CAD is likely headed significantly lower in the next 90 days. So, a bearish position trade from just beneath 1.2000 may prove to be lucrative.

Until elected, I’ll have sell orders from 1.1994. With an initial stop at 1.2159, this bearish position trade produces 165 pips on a standard 1:1 risk vs reward management plan.