USD/CAD’s decline from 1.3418 resumed last week and edged lower to 1.3081. But it then lost downside momentum and turned sideway. Initial bias remains neutral this week first and further fall is mildly in favor with 1.3259 resistance intact. On the downside, break of 1.3081 will target a test on 1.2994 low. Break will resume the larger fall from 1.4667. However, break of 1.3259 resistance will extend the consolidation pattern from 1.2994 with another rising leg. Intraday bias will be turned back to the upside for 1.3418 instead.
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, firm break of 1.3715 resistance will argue that this falling leg has completed and turn focus back to 1.4667/89 resistance zone.
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.