Earlier today, the greenback climbed to a fresh five-year high against its Canadian counterpart as disappointing Friday’s data, which showed that the number of employed people in Canada declined by 4,300 last month (missing expectations for a 15,000 rise) continued to weigh. In this way, USD/CAD approached the short-term resistance. Will it stop currency bulls’ charge in the coming days?

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

• EUR/USD: none
• GBP/USD: none
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: long (stop loss: 0.7940; initial upside target: 0.8230)

EUR/USD

The situation in the medium term hasn’t changed much as EUR/USD is still trading in a narrow range between the previously-broken 2010 low and the support area created by the 76.4% and 78.6% Fibonacci price projections.

What can we infer from the daily chart? Let’s take a look.

From this perspective, we see that although EUR/USD extended gains, the previously-broken 2010 low (which serves as the key resistance at the moment) stopped further improvement, triggering a pullback. Taking this fact into account, we thing that as long as there is no invalidation of the breakdown below this important level higher values of the exchange rate are not likely to be seen. Nevertheless, the current position of the indicators (the CCI and Stochastic Oscillator) suggests that currency bulls will try to push the pair higher in the coming day(s). If this is the case, and we see a comeback above the 2010 low, we’ll consider opening long positions.

Very short-term outlook: mixed with bullish bias
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed

Trading position (short-term): In our opinion, no positions are justified from the risk/reward perspective at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

USD/JPY

Looking at the above charts, we see that although USD/JPY moved higher earlier today, the pair is still trading well below the previously-broken green support/resistance line, which suggests that another attempt to break below the 23.6% Fibonacci retracement is more likely than not. The reason? We think that the best answer to this question will be our last commentary on this currency pair:

(…) Firstly, the pair is still trading under the 61.8% Fibonacci retracement (based on the entire 1998-2011 declines), which successfully supports the resistance area marked on the daily chart. Secondly, although the USD Index hit fresh multi-year highs in the recent days, USD/JPY didn’t follow this move and still remains under the 2014 high. We saw similar price action at the beginning of Oct (marked with orange). Back then, such lack of a new high translated to lower values of the exchange rate. Therefore, we think that we could see a correction from here in the coming days (especially if the pair drops under 118.85).

Very short-term outlook: mixed with bearish bias
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: bullish

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

USD/CAD

Quoting our last commentary on this currency pair:

(…) currency bulls (…) managed to push the pair higher (…), which suggests that USD/CAD could move even to around 1.1928, where the 200% Fibonacci extension is.

As you see on the daily chart, the situation developed in line with a the above-mentioned scenario as USD/CAD approached our upside target. What’s next? In our opinion, if the nearest resistance is broken, we will likely see further improvement and an increase to the 70.7% Fibonacci retracement (around 1.1977) seen on the weekly chart. Nevertheless, the current position of the indicators (they are very close to generate sell signals) suggests that a pause or even a trend reversal is just around the corner.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief

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