Earlier today, the euro moved lower against the U.S. dollar, which approached EUR/USD to the first important support line. Will it withstand the selling pressure in the coming days?

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

• EUR/USD: short (stop-loss order at 1.1512; initial downside target at 1.0572)
• GBP/USD: none
• USD/JPY: none
• USD/CAD: none
• USD/CHF: long (stop-loss order at 0.9633; initial downside target at 1.0239)
• AUD/USD: none

EUR/USD

Although EUR/USD moved little higher earlier today, the pair reversed and erased all gains. With this downswing, the exchange rate approached the blue navy support line, which means that what we wrote yesterday remains up-to-date:

(…) Although the proximity to this support line could encourage currency bulls to act (and trigger a rebound from here), we believe that as long as the exchange rate remains under the key resistance lines (red declining line based on the Apr, Jul and Aug lows and marked on the weekly chart and the upper border of the green rising trend channel) another attempt to move lower is more likely than not. This scenario is also reinforced by the current position of the daily indicators (sell signals remain in place, supporting currency bears). Nevertheless, in our opinion, an acceleration of declines will be more likely and reliable after a breakdown under the navy blue support line. In this case, the pair will test the lower border of the green rising trend channel in the following days.

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 1.1512 and the initial downside target at 1.0572) 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 Friday, we wrote the following:

(…) If (…) the exchange rate declines under the lower purple line, we’ll see (at least) a test of the green support zone created by the 50% Fibonacci retracement and the Feb low of 1.3637.

On the daily chart, we see that the situation developed in line with the above scenario and USD/CAD reached our initial downside target. Although this area encouraged currency bulls to act and the exchange rate rebounded yesterday, the pair is still trading under the previously-broken lower border of the purple triangle/rising wedge and the medium-term green line, which together serve as the nearest resistance. Therefore, in our opinion, higher values of USD/CAD will be more likely if the pair comes back above these lines. Finishing today’s commentary on this currency pair it is worth noting that the CCI and Stochastic Oscillator generated buy signal, which in combination with the medium-term picture (on the chart below) suggests that reversal is just around the corner.

Looking at the weekly chart, we see that although USD/CAD moved lower earlier this week, the upper border of the long-term rising trend channel continues to keep declines in check.

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/CHF

As you see on the daily chart, the situation in the very short term has improved as USD/CHF extended gains and broke above the 38.2% Fibonacci retracement. This positive signal suggests that the exchange rate will likely test the next retracement (at 0.9958) or even the previously-broken blue support/resistance line (currently around 0.9973) in the coming days.

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

Trading position (short-term; our opinion): Long positions (with a stop-loss order at 0.9633 and the initial upside target at 1.0239) 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

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