Earlier today, the euro moved lower against the greenback as the USD Index rebounded supported by yesterday’s upbeat comments by Federal Reserve Chair Janet Yellen. As a result, EUR/USD slipped under important support line once again, but will currency bears manage to push the exchange rate lower in the coming days?
In our opinion the following forex trading positions are justified - summary:
EUR/USD
Looking at the above charts, we see that the overall situation hasn’t changed much as EUR/USD is wavering between the 38.2% Fibonacci retracement and the lower border of the blue rising trend channel. This means that our last commentary on this currency pair remains up-to-date also today:
(…) on weekly chart, we see that although ERU/USD moved higher earlier this week, (…) the exchange rate is still trading under the red resistance line based on the March and November 2015 lows. Therefore, as long as there is no successful breakout above this important line, a further rally is not likely to be seen and another attempt to move lower should not surprise us – especially when we factor in the current situation in the very short-term chart.
(…) the 38.2% Fibonacci retracement encouraged currency bears to act, which resulted in a pullback yesterday (…) the current position of the indicators and the medium-term picture suggest that another reversal and lower values of EUR/USD are just around the corner (even if we see a re-test of the Fibonacci retracement first). Nevertheless, as long as the situation remains unclear waiting on the sidelines seems to be the best decision. As always, we will keep you – our subscribers – informed should anything change.
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. Nevertheless, if we see a weekly closure below the red support/resistance line based on the March and November 2015 lows, we'll consider opening short positions. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
USD/JPY
On the daily chart, we see that the proximity to the 50% Fibonacci retracement encouraged currency bulls to act, which resulted in a rebound and a comeback to the previously-broken green zone. Additionally, the buy signals generated by the indicators remain in play, suggesting another upswing and a re-test of the orange resistance zone or even the upper border of the blue declining trend channel (marked on the weekly chart) in the coming days.
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/CHF
From today’s point of view, we see that USD/CHF rebounded earlier this week, which resulted in a comeback to the green zone. Additionally, the CCI and the Stochastic Oscillator generated buy signals, which suggests another attempt to move higher and a test of the upper border of the purple declining trend channel (seen on the daily chart) in the coming days.
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.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief
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