USD/CAD rebounded to 1.0249 last week but was limited there and weakened again. Current development argues that correction from 1.0445 is not completed yet. Initial bias is mildly on the downside this week and break of 1.0100 will target 61.8% retracement of 0.9799 to 1.0445 at 1.0046. Though, we'd expect strong support from 1.0046 to contain downside to complete the correction and bring rebound. Meanwhile, above 1.0249 will flip bias back to the upside. Further break of 1.0362 will suggest that rise from 0.9799 is resuming for above 1.0445.

In the bigger picture, correction from 1.0656 is finished with three waves down to 0.9799 and rise from there is resuming the medium term rebound from 0.9406. Such rise from 0.9406 is either a correction to fall from 1.3063 or the third leg of the whole consolidation pattern from 2007 low of 0.9056. In either case, USD/CAD should target 38.2% retracement of 1.3063 to 0.9406 at 1.0803 first and possibly further to 100% projection of 0.9406 to 1.0656 from 0.9799 at 1.1049 before completion. Break of 0.9799 support is needed to invalidate this view or we'll stay bullish even in case of deep pull back.

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.