USD/CAD’s recovered further to 1.3259 last week but lost momentum well ahead of 55 day EMA and retreated. Initial bias is neutral this week first, and further rise is mildly in favor as long as 1.3086 minor support holds. On the upside, break of 1.3259 will target 38.2% retracement of 1.4667 to 1.2994 at 1.3633, to correct the whole fall from 1.4667. Nevertheless, on the downside, break of 1.3086 will bring retest of 1.2994 low.
In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). Sustained break of 61.8% retracement of 1.2061 to 1.4667 at 1.3056 will target a test on 1.2061 (2017 low). But we’d expect loss of downside momentum as it approaches this key support. On the upside, though, break of 1.3715 resistance is needed to confirm completion of the fall. Otherwise, outlook will stay bearish.
In the longer term picture, the bullish case of resuming the up trend from 0.9506 (2007 low) is delayed. Consolidation from 1.4689 is extending for another medium term fall. As long as 1.2061 support holds, such up trend should still resume through 1.4689 at a later stage.