USD/CAD dropped to as low as 0.9765 last week and the break of 0.9799 support invalidated our original view. Initial bias remains on the downside this week and current decline would now target 100% projection of 1.0656 to 0.9799 from 1.0445 at 0.9598. So far price actions from, 1.0656 are corrective looking and thus, we'd focus on reversal signal again near to 0.9598. Though, break of 0.9948 resistance is needed to indicate short term reversal or outlook will stay bearish. And, sustained break of 0.9598 could pave the way to retest 0.9406 low.
In the bigger picture, so far, price actions from 1.0656 are still corrective looking even though fall from 1.0445 was deeper than expected. At this point, we'd still favor any downside attempt to be contained above 0.9406 low and bring another rebound to 38.2% retracement of 1.3063 to 0.9406 at 1.0803. Nonetheless, we'd not too confident on this view and will pay attention to whether current decline would accelerate or decelerate to confirm.
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.