USD/CAD Weekly Outlook

USD/CAD's rise extended further to as high as 1.1636 last week, meeting mentioned resistance zone of 1.1475/1.1814 as expected. Though, the pair lost some momentum inside this zone and turned sideway after reaching 1.1636. Initial outlook is neutral this week and some consolidation could be seen with pull back to 1.1418 minor support or below. Nevertheless, downside is expected to be contained by 1.1226 support and bring rally resumption to test 1.1814 resistance. However, note that break of 1.1226 support will argue that whole rebound from 1.0784 has completed and will flip bias back to the downside for retesting this low.

In the bigger picture, fall from 1.3063 is treated as correction to impulsive rally from 0.9056 to 1.3063 and has met target support zone of 1.0297/0819 already. We're slightly favoring the case that such correction has completed at 1.0754 already. Break of mentioned 1.1475/1.1814 resistance zone will confirm this case and should at least bring strong rally to key cluster resistance at 1.2191 (61.8% retracement of 1.3063 to 1.7084 at 1.2192). Nevertheless, a break below 1.0940 support will confirm that such rise from 1.0784 has completed. In addition, the corrective structure will aurge that fall from 1.3063 is still in progress, probably to 61.8% retracement of 0.9056 to 1.3063 at 1.0587 before completion.

In the longer term picture, while a medium term top might be in place at 1.3063 already, there is no change in the view that whole rise from 0.9056 is impulsive in nature. In other words, fall from 1.3063 is treated as correction in the larger up trend only and will likely be contained by mentioned 1.0297/1.0819 support zone, with 61.8% retracement of 0.9056 to 1.3063 at 1.0587 inside. We'd expect at least another medium term rally to above 1.3063 before completing the rise from 0.9056.

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