At the beginning of the week, the U.S. dollar extended gains against the yen, which took the exchange rate above the level of 114. Despite this increase, the pair is trading in the consolidation. Will we see another upswing in near future?

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: short (a stop-loss order at 1.3087; the initial downside target at 1.2602)
• USD/JPY: long (a stop-loss order at 107.62; the next upside target at 114.87)
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

From today’s point of view, we see that the overall situation hasn’t changed much since yesterday, because EUR/USD is still trading under the previously-broken upper border of the brown rising trend channel and the long-term red declining resistance line (both marked on the weekly chart). This means that an invalidation of the earlier breakouts and its negative impact on the exchange rate is still in effect, suggesting another attempt to move lower in the coming day(s).

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/JPY

Looking at the daily chart, we see that USD/JPY is consolidating around the 76.4% and 78.6% retracements under the yellow resistance zone. Although such price action makes the very short-term picture a bit unclear, we think that another attempt to move higher is likely – especially when we factor in the medium-term picture of the exchange rate.

On the weekly chart, we see that USD/JPY is still trading above the upper border of the brown declining trend channel, which together with the current position of the weekly indicators suggests further improvement. If this is the case, we could see an upward move to the orange resistance zone in the coming days.

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 107.62 and the initial upside target at 111.16) 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 the breakout above the upper border of the brown declining trend channel triggered a sharp increase, which approach USD/CHF to the April peak. The proximity to this resistance paused the rally, however, as long as there are no sell signals generated by the indicators another upswing and a test of the yellow resistance zone can’t be ruled out.

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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