USD/CAD dipped further to as low as 1.0043 last week and attempted a rebound after hitting 55 days EMA. However, the rebound was rather weak and was limited below 1.0272 minor resistance. The development suggest that fall from 1.0656 is not over yet and now favors deeper decline ahead. initial bias is mildly on the downside this week for 1.0043 and break will likely push USD/CAD through 1.0009 key support level to target 61.8% retracement of 0.9406 to 1.0656 at 0.9884 next. On the upside, though, break of 1.0272 resistance will confirm that pull back from 1.0656 has completed and should bring retest of this high instead.

In the bigger picture, an important medium term bottom is formed at 0.9406 on bullish convergence condition in MACD without doubt. However, rise from 0.9406 so far lacked decisive momentum and can't even reach 38.2% retracement of 1.3063 to 0.9406 at 1.0803 yet. The current development even now mildly favors the case that price actions from 0.9406 are merely correcting the down trend form 1.3063, rather than reversing. Having said that, we don't think the correction has completed at 1.0656 yet. Even if the current pull back from 1.0656 might turn out to be much deeper the originally thought, we'd expect downside to be contained by 0.9406/9725 support zone and bring another rise to extend the consolidation/correction. 38.2% retracement at 1.0803 should still be exceeded in medium term.

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. The strong resistance ahead of the falling 55 months EMA suggests that decline from 1.3063 might still be in progress and a break of 0.9406 will possibly extend the down trend through 0.9056 low.