Earlier today, official data showed that the Gfk German Consumer Climate Index slipped to 10 in Sep, disappointing market participants. As a result, EUR/USD declined to yesterday’s lows, but did this drop change anything in the technical picture of the exchange rate?

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

• EUR/USD: long (a stop-loss order at 1.1114; initial upside target at 1.1327)
• GBP/USD: none
• USD/JPY: none
• USD/CAD: short (a stop-loss order at 1.3346; initial downside target at 1.2876)
• USD/CHF: none
• AUD/USD: none

EUR/USD

The medium-term picture hasn’t changed much as EUR/USD remains in the blue consolidation under the brown resistance line.

Will the very short-term chart give us more clues about future moves? Let’s check.

From this perspective, we see that EUR/USD is trading above the level of 1.1190, which suggests that our yesterday’s assumptions remain up-to-date:

(…) the CCI and Stochastic Oscillator generated sell signals, suggesting further deterioration in the coming days. Nevertheless, when we take a closer look at the daily chart we can notice a potential reverse head and shoulders formation. If this is the case, the right shoulder is currently underway and we should see a reversal in the coming day(s). Nevertheless, if the exchange rate drops under 1.1174 we’ll likely close long positions. As always, we’ll keep you - our subscribers - informed should anything change.

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 1.1114 and initial upside target at 1.1327) 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

Last Thursday, we wrote the following:

(…) we think that as long as there won’t be buy signals generated by the indicators another downswing and a test of the green support line based on the Jun and Aug lows can’t be ruled out.

On the weekly chart, we see that currency bears pushed USD/JPY lower, which approached the exchange rate to our downside target. As you see, the green support line based on the Jun and Aug lows triggered a rebound in recent days, however, we saw similar price action in the previous week. Therefore, in our opinion, as long as there won’t be breakout above the orange declining resistance line (seen on the chart below) another bigger move to the upside is not likely to be seen.

Nevertheless, when we take a closer look at the above chart, we see that the CCI generated a buy signal, while the Stochastic Oscillator is very close to doing the same, which suggests that further improvement is just around the corner. When we may see such price action? In our opinion, it will be more reliable if USD/JPY climbs above Friday high of 101.22.

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.

USD/CAD

Looking at the daily chart, we see that although currency bulls pushed USD/CAD higher in recent days, they didn’t manage to hold gained levels, which resulted in a pullback and invalidation of the breakout above the upper border of the blue rising trend channel. Additionally, the pair closed yesterday’s session under this line, which suggests that further deterioration is just around the corner and today’s rebound is just a verification of earlier breakdown. On top of that, the CCI and Stochastic Oscillator are very close to generating sell signals, increasing the probability of declines. If this is the case and the pair declines from current levels, the first downside target would be around 1.3000-1.3028, where the last week’s lows are.

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

Trading position (short-term; our opinion): Short positions (with a stop-loss order at 1.3346 and initial downside target at 1.2876) 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

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