..but stays with the fenced boundary

The USDCAD made a break for the outer extreme in trading today - falling from the 100 and 200 hour MAs in the process ( see blue and green lines in the chart below). The fall took the price to the outer "fence" defined by lows going back to August 24th. There have been a couple of breakout attempts at the end and beginning of September, but those moves were quickly reversed.

So the pair remains confined.

Taking a step back, the recent activity has been a bit more bearish.

  1. Lower highs
  2. Held below the 100 and 200 hour MA today
  3. So far staying below the 38.2% of the move down today.

Oil prices are up 5.3% today which is contributing to the fall (the stronger CAD). We have seen that story try to play out in the past though, only to have the rallies in oil stall. The Crude oil inventory data was much higher than expected but not in relation to the API data (see post here).

The overall oil price bearishness and the FOMC decision tomorrow (hike? or no hike?) may/should keep the pair contained. But 18 days with most activity in the box is building the momentum for a break and run. So traders will have their fingers on the trigger - it may not be until tomorrow PM for a true read, however.