US Crude Oil and USDCAD Push Synched Range Swings Ahead of US CPI
US Crude Oil and USDCAD Push Synched Range Swings Ahead of US CPI
Both US Crude Oil (WTI) and the US Dollar (USDCAD) have consolidated in an overlapping range ahead of tomorrow’s key inflation data. With January CPI re-weighted and methodological changes announced last week, expectations for the largest rise in three months are reflected in prices. However, the current state of trade suggests that it isn’t a clear call for the market to take advantage of this potential.
Technically speaking, it is not hard to see why the pair could struggle to break a convergence of its 3 month-old descending triangle pattern and 200-day Exponential Moving Average (EMA), around 1.3270 by the end of today’s trading session. A retest of the former resistance at 1.3200, which is now the ‘zone floor’, would also be required for any meaningful breakout in USDCAD to take place.
Looking at the larger speculator group measured by the CFTC Commitment of Traders report, the net long position is near the lowest we have seen in seven years. Similarly, retail interest via IG CFD trading is very much catering to the swings and is still a net long position. Regardless, it is important to note that USDCAD could well be the next major asset that breaks out of its pattern. If so, the key level to watch is 1.3250, where it has a better chance of making a break than the former support at 1.3200.