Earlier today, the U.S. dollar extended gains against its Canadian counterpart after the United States slapped duties on Canadian softwood lumber. As a result, USD/CAD hit a fresh 2017 high, but will we see further rally?

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

• EUR/USD: short (a stop-loss order at 1.1052; the initial downside target at 1.0521)
• GBP/USD: none
• USD/JPY: long (a stop-loss order at 107.62; the initial upside target at 111.16)
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Looking at the charts, we see that although EUR/USD moved a bit higher earlier today, the exchange rate remains under the March high, which means that an invalidation of the tiny breakout above this resistance and its negative impact on the pair is still in effect. Therefore, we believe that what we rote yesterday is up-to-date also today:

(…) the proximity to the upper border of the brown rising trend channel and the 61.8% Fibonacci retracement encouraged currency bears to act. As a result, the exchange rate pulled back, invalidating the earlier breakout above the March peak.

Additionally, the daily RSI (…) generated the sell signal, while the CCI and the Stochastic Oscillator climbed to their overbought areas, suggesting that reversal and lower values of the exchange rate are just around the corner.

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

Trading position (short-term; our opinion): Short positions (with a stop-loss order at 1.1052 and the initial downside target at 1.0521) 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

The first thing that catches the eye on the above charts is the breakout above the December high and the upper border of the purple rising wedge seen on the weekly chart. Taking tis positive event into account, it seems that currency bulls will try to push USD/CAD to the112.8% or 127.2% Fibonacci extension in the coming days. Nevertheless, the current position of the daily indicators suggests that reversal later this week should not surprise us.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
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.

AUD/USD

On the daily chart, we see that AUD/USD moved lower in previous days and approached the green support zone once again. Despite this drop, the key short-term support continues to keep declines in check, which suggests that we may see another rebound in the following days – especially when we factor in the buy signal generated by the Stochastic Oscillator.

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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