Earlier today, the Labor Department reported that the U.S. economy added 151,000 jobs in the previous month, while the U.S. unemployment rate slipped to 4.9% and average hourly earnings rose 0.5%. Thanks to these numbers, the USD Index reversed and came back above 97. What impact did it have on the euro?
In our opinion the following forex trading positions are justified - summary:
EUR/USD
Earlier today, EUR/USD moved little lower, but the exchange rate is still trading above the previously-broken 50% Fibonacci retracement, the barrier of 1.1000, mid-Dec highs and the long-term green line based on Mar and Apr lows, which suggests that today’s pullback may be just a verification of earlier breakouts. In our opinion, today’s closure will likely give us more clues about future moves. Therefore, we think that waiting on the sidelines for confirmation (or invalidation) the above is justified from the risk/reward perspective at the moment.
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/CAD
Looking at the weekly chart we see that USD/CAD rebounded slightly, which resulted in a comeback above the previously-broken upper border of the long-term rising trend channel. Although this is a positive signal, which suggests further improvement, we think that it would be more reliable if the pair closes the week above it.
Having said that, let’s examine the very short-term picture.
On the daily chart, we see that USD/CAD moved little higher and came back to the 50% Fibonacci retracement. Despite this move, the size of today’s rebound it tiny compared to Wednesday’s decline. Additionally, the pair remains under the previously-broken green line (which serves as the nearest resistance at the moment), which means that as long as there is no comeback above it another downswing can’t be ruled out. In other words, waiting on the sidelines for confirmation (or invalidation) the above is justified from the risk/reward perspective at the moment.
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
Yesterday, we wrote:
(…) USD/CHF moved lower once again (after a small rebound) and came back under the green line, which suggests that the exchange rate may test the blue support line based on the Aug and Oct lows (marked on the weekly chart; currently at 0.9922) in the coming days.
On the above charts, we see that currency bears pushed USD/CHF lower as we had expected. With this downswing, the pair reached our downside target and the 50% Fibonacci retracement, which in combination with the proximity to the Jan low triggered a rebound. As a result, the exchange rate invalidated earlier small breakdown under the blue line, which is a positive signal at the first sight. Nevertheless, in our opinion, this event would be more reliable if the pair closed the day (and the week) above it.
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.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief
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