USD/CAD Weekly Outlook

USD/CAD engaged in sideway trading in range of 0.9842/9948 last week. The development suggest that fall from 1.0445 is not finished yet and another low would be seen. But again, we view fall from 1.0445 as a corrective move and expect strong support ahead of 0.9799 to contain downside and bring reversal. On the upside, above 0.9948 minor resistance will flip bias back to the upside for 1.0065 support turned resistance. Break will confirm completion of corrective fall from 1.0445 and target 1.0231 resistance and above.

In the bigger picture, firstly price actions from 1.0656 are viewed as corrective, no change in this view. The depth of the fall from 1.0445 raised the possibility for such consolidation to extend further. But after all, we're staying bullish in USD/CAD and expects rebound from 2011 low of 0.9406 to resume later to 38.2% retracement of 1.3063 to 0.9406 at 1.0803. And, we'll maintain this bullish view as long as 0.9799 support holds.

In the longer term picture, there is no clear indication that the long term down trend from 2002 high of 1.6196 has reversed even though bullish convergence condition was seen in monthly MACD. Current development dampens the case that fall from 1.3063 is resuming the such down trend. But there is no change in the long term bearish view so far. A break of 0.9056 low is still anticipated after all the consolidative price actions from 0.9406 complete.