In our opinion, the following forex trading positions are justified - summary:

EUR/USD: short (a stop -loss order at 1.1250; the initial downside target at 1.1082)
GBP/USD: long (a stop-loss order at 1.2802; the initial upside target at 1.3312)
USD/JPY: short (a fresh stop-loss order at 108.91; the next downside target at 107.72)
USD/CAD: long (a stop-loss order at 1.2877; the initial upside target at 1.3084)
USD/CHF: none
AUD/USD: none

EUR/USD

After a string of recent losses, many wonder whether and how far can the euro still drop. Driven by the flight-to-safety amid current geopolitical turmoil or not, let's assess the technical outlook cold-bloodedly.

As EUR/USD extended losses earlier today, it's time to recall our yesterday's observations as they're still up-to-date also today:

(...) the CCI and the Stochastic Oscillator generated their sell signals, increasing the probability of further deterioration in the following days.

(...) Nevertheless, a bigger move to the downside will be more likely and reliable only if EUR/USD drops below the lower border of the rising green trend channel.

Should we see such price action, the way to the late-December lows would be open.

Trading position (short-term; our opinion): Short positions with a stop -loss order at 1.1250 and the initial downside target at 1.1082 are justified from the risk/reward perspective.

GBP/USD

The overall situation in the short term hasn't changed much as GBP/USD keeps trading above the 61.8% Fibonacci retracement. Let's bring up our Monday's comments as they're up to date also today:

(...) The pair has slipped to the 61.8% Fibonacci retracement, which acted as a support earlier today, encouraging the bulls to act.

Taking all the above into account, further improvement is probably just around the corner and a retest of the last week's peak appears to be just a matter of time.

Trading position (short-term; our opinion): Long positions with a stop-loss order at 1.2802 and the initial upside target at 1.3312are justified from the risk/reward perspective.

AUD/USD

The tiny breakout above the upper border of the rising green trend channel has been invalidated, and what a ride lower followed. The recent sharp move to the downside brought the exchange rate to the green support area created by the 50% Fibonacci retracement and the mid-December lows. This zone could trigger a rebound in the very near future.

But as the daily indicators still have room for further declines, another attempt to move lower is likely - and it could come after the above-mentioned rebound scenario. Should it be the case, we could see a test of the lower border of the green rising trend channel in the coming days.

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist