Earlier today, the Australian dollar moved higher against its U.S. counterpart after minutes of the Reserve Bank of Australia's May policy meeting reduced expectations of an interest rate cut. Thanks to these circumstances AUS/USD approached the last week’s high. Will we see further improvement in the coming days?

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

• EUR/USD: short (stop-loss order at 1.1754; initial downside target at 1.1222)
• GBP/USD: short (stop-loss order at 1.4819; initial downside target at 1.4303)
• USD/JPY: none
• USD/CAD: long (stop-loss order at 1.2182; initial upside target at 1.3000)
• USD/CHF: none
• AUD/USD: none

EUR/USD

Looking at the daily chart, we see that the situation hasn’t changed much since yesterday as EUR/USD is still consolidating around the 38.2% Fibonacci retracement, inside the red declining wedge, which means that our previous commentary is up-to-date:

(…) the exchange rate is still trading under the Feb, Apr and May highs and well below the blue and purple resistance lines, while sell signals generated by the weekly indicators are still in play. Additionally, the pair remains in the red declining wedge, which suggests that as long as there won’t be breakout above the upper red resistance line another attempt to move lower is very likely. If this is the case, and EUR/USD extends declines, we’ll likely see a test of the green support zone created by the previously-broken upper border of the purple declining trend channel, the 50% Fibonacci retracement and the bottom of the previous correction (around 1.1217-1.1241) in the coming week.

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

Trading position (short-term; our opinion): Short positions (with a stop-loss order at 1.1754 and the initial downside target at 1.1222) 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/CAD

On the weekly chart, we see that the previously-broken green support/resistance line continues to keep gains in check. Nevertheless, the current position f the indicators suggests that further improvement is just around the corner. Will the very short-term picture confirm this pro-growth scenario? Let’s check.

Looking at the daily chart, we see that although the resistance zone (created by the 23.6% Fibonacci retracement based on the entire Jan-May decline, the barrier of 1.3000 and the previous high) triggered a pullback, the pair reversed and rebounded earlier today. Taking this fact into account and buy signal generated by the Stochastic Oscillator, we think that another attempt to move higher is just around the corner. However, further rally will be more reliable if we see a breakout above these resistance levels.

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

Trading position (short-term; our opinion): Long positions (with a stop-loss order at 1.2182 and the next upside target at 1.3155) 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.

AUD/USD

On the weekly chart, we see that the proximity to the lower border of the purple rising trend channel encouraged currency bulls to act, which resulted in a climb above the previously-broken 50% Fibonacci retracement marked on the daily chart. Although AUD/USD gave up some gains in the following hours, buy signals generated by all indicators are still in lay, supporting further improvement. If this is the case and we see such price action, the initial upside target would be around 0.7475-0.7490, where the orange resistance zone (created by the March and Apr lows) is.

Very short-term outlook: mixed with bullish bias
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.

As a reminder – “initial target price” means exactly that – an “initial” one, it’s not a price level at which we suggest closing positions. If this becomes the case, we will refer to these levels as levels of exit orders. Stop-loss levels, however, are naturally not “initial”, but something that, in our opinion, might be entered as an order.

Thank you.

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

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