Earlier today, the ADP report showed that the U.S. private sector added 177,000 jobs in the previous month, beating expectations for a growth of 175,000. Thanks to these solid numbers, the USD Index extended gains and climbed above the level of 96. How did this increase affect the euro, Swiss franc and Australian dollar?

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

On the daily chart, we see that EUR/USD closed yesterday’s session under the upper border of the red declining trend channel, which means that our previous commentary on this currency pair is up-to-date:

(…) this is a negative signal, which suggests further deterioration in the following days, (…) the exchange rate will likely drop to around 1.1083, where the next support zone (created by the 61.8% Fibonacci retracement based on the entire Jun-Aug upward move and the Aug lows) is.

Very short-term outlook: mixed with bearish 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

Looking at the daily chart, we see that USD/CHF extended gains and climbed to the orange resistance zone created by the Aug highs. Although this area may stop further improvement, we think that as long as there won’t be sell signals generated by the CCI and Stochastic Oscillator another attempt to move higher can’t be ruled out. Therefore, if the pair increases from current levels and closes the day above the orange area, the next upside target would be around 0.9893, where the previously-broken green resistance line (marked on the weekly chart) and the yellow resistance zone are.

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 at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

AUD/USD

From today’s perspective, we see that although AUD/USD bounced off the lower border of the purple rising wedge earlier this week, the medium-term green line (based on the previous lows) stopped further improvement, triggering a sharp pullback. In this way, the pair verified earlier breakdown, which resulted in a drop below the lower line of the rising wedge. Taking this negative fact into account, it seems that AUD/USD will extend losses. Nevertheless, we should keep in mind that the CCI and Stochastic Oscillator are extremely oversold, which suggests that the space for declines may be limited and reversal in near future should not surprise us – especially when we factor in the proximity to the green support zone.

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, Gold & Silver Fund Manager

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