Although the Labor Department reported that initial jobless claims rose by 2,000 to 263,000, the USD Index remains around three-week highs against the other major currencies. Will the U.S. currency extend gains in the coming days?

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

• EUR/USD: none
• GBP/USD: short (a stop-loss at 1.3579; initial downside target at 1.2519)
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

From today’s point of view, we see that the overall situation in the very short term remains almost unchanged as EUR/USD is still trading in a narrow range under the previously-broken upper border of the red declining trend channel. Although such breakdown is a negative signal, currency bulls do not give up and keep the exchange rate around the 50% Fibonacci retracement (based on the entire Jun-Aug upward move). Additionally, the CCI and Stochastic Oscillator are oversold, which suggests that the space for declines may be limited and reversal in the coming days (quite possible tomorrow) should not surprise us.

Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed

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

USD/JPY

On Wednesday, we wrote the following:

(…) the pair invalidated earlier breakdown under the blue support zone (seen on the weekly chart), which is a positive signal that suggests further improvement in the coming weeks – especially when we take into account the current position of the weekly (the CCI and Stochastic Oscillator generated buy signals) and monthly (the CCI and Stochastic Oscillator are very close to generating buy signals) indicators.

Looking at the above charts, we see that currency bulls pushed the exchange rate higher, which resulted in a climb well above the level of 103. But will we see further improvement in the coming days? Let’s examine the daily chart and find out.

On the daily chart, we see that USD/JPY broke not only above the yellow resistance zone, but also above the 50% Fibonacci retracement, which is a positive signal that suggests a climb to the next retracement around 104.44 or even to the orange resistance zone in the coming days. Nevertheless, we should keep in mind that the CCI and Stochastic Oscillator are overbought and very close to generating sell signals. Additionally, the RSI approached the level of 70, which suggests that reversal may be just around the corner.

Very short-term outlook: mixed
Short-term outlook: mixed
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.

USD/CAD

The first thing that catches the eye on the weekly chart is breakout above the upper border of the blue consolidation. Although this is a positive signal, we saw similar price action at the end of Jul. Back then, the proximity to the long-term green rising resistance line was enough to trigger a reversal and decline. Therefore, in our opinion, as long as there won’t be invalidation of the breakdown under this line another sizable move is not likely to be seen. Nevertheless, buy signal generated by the Stochastic Oscillator suggests that currency bulls will likely try to push the pair higher in the coming week(s). But will we see such improvement before a pullback?

Not likely, because, USD/CAD extended gains and reached the yellow resistance zone once again. As you see on the daily chat, this area stopped currency bulls at the beginning of Aug, which suggests that we may see similar price action in the coming days – especially when we factor in the current position of the daily indicators (the CCI and Stochastic Oscillator are very close to generating sell signals, which increases the probability of reversal in very near future - maybe even tomorrow).

Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective. 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, Gold & Silver Fund Manager

Gold & Silver Trading Alerts
Forex Trading Alerts
Oil Investment Updates
Oil Trading Alerts