USD/CAD dropped to as low as 0.9981 last week and the break of 1.0051 support confirmed resumption of fall from 1.0522. Further decline is expected as long as 1.0147 resistance holds, for 0.9891 support. Break will target 100% projection of 1.0656 to 0.9891 from 1.0522 at 0.9763. On the upside, break of 1.0147 resistance will indicate short term bottoming and bring stronger rebound back towards 1.0522 resistance. After all, USD/CAD is still bounded in range of 0.9891/1.0656 and recent price actions look corrective. That is more consolidative trading would be seen before confirmed breakout.

In the bigger picture, a medium term bottom is in place at 0.9406 and price actions from there could either be consolidation to fall from 1.3063 or the third leg of the whole consolidation pattern from 2007 low of 0.9056. We're favoring neither case as USD/CAD for the moment. Firstly, we'd expect 0.9406 to hold for a while at least. Secondly, the eventual pattern of the price actions from 1.0656 would decide whether rebound from 0.9406 is going to extend higher, or USD/CAD is just gyrating in range. We'll stay neutral first until the pattern from 1.0656 finishes.

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 complete.