USD/CAD gyrated lower last week but recovered after hitting 1.2659. Initial bias is neutral this week first. On the downside, break of 1.2659 will argue that rebound from 1.2588 has completed at 1.2880. Intraday bias will be turned back to the downside for retesting 1.2588 low. On the upside, break of 1.2781 minor resistance will revive near term bullishness. Intraday bias will be turned back to the upside for 1.2880 and above, to resume the rebound from 1.2588.
In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). Further decline should be seen back to 1.2061 (2017 low). In any case, break of 1.3389 resistance is needed to indicate medium term bottoming. Otherwise, outlook will remain bearish in case of rebound.
In the longer term picture, we’re viewing price actions from 1.4689 as a consolidation pattern. Thus, up trend from 0.9506 (2007 low) is still expected to resume at a later stay. This will remain the favored case as long as 1.2061 support holds, which is close to 50% retracement of 0.9406 to 1.4689 at 1.2048.
