USDCAD Overnight Range 1.3853-1.3958          

The Canadian dollar has ignored another drop in WTI to $29.40/b (currently) and has managed to grind higher. USDCAD opened with a bid tone in New York but failed to extend gains above the downtrend line at 1.3960.  The Loonie has decoupled from trading with Aussie and Kiwi, at least for today, and has joined the European currency rally against the US dollar.

Overnight, it was another wild G-10 FX session driven by a lack of top tier data releases, a dearth of liquidity due to the Chinese New Years holiday’s, caution ahead of Janet Yellen’s Humphrey Hawkins testimony on Wednesday and an equity market sell-off.

USDJPY broke through key support in the 116.00-20 area yesterday and plunged to a low of 114.81 in Asia as the Nikkei lost 5.40%.   Bank of Japan officials provided a dose of verbal intervention and USDJPY rallied but it petered out when New York came in.

Oil price swings have been fairly tame.  WTI has traded within a $29.40-$30.61/b range. It may not last. The International Energy Agency (IEA) forecast that the global oil surplus will be bigger than previously guessed; to the tune of 1.75 million barrels per day. Goldman Sachs now says that over-supply and dwindling storage could push prices below $20.00/b.

Once again, there isn’t any data to get excited about today leaving FX traders to take direction from equities and oil price swings.

USDCAD technical outlook

The intraday USDCAD technicals are bearish following the break of the February uptrend line at 1.3890 and targets a test of minor support at 1.3840.  If this level breaks, USDCAD losses will extend down to 1.3700.  If not, we could see additional 1.3840-1.3960 consolidation until after Yellen’s speech tomorrow. A move above 1.3960 should extend gains to 1.4120.  For today, USDCAD support is at 1.3840 and 1.3790.  Resistance is at 1.3960 and 1.4020

Forecast Range for the day 1.3840-1.3940

Chart USDCAD 1 hour