Earlier today, the greenback moved sharply lower against the yen after the Bank of Japan Governor Hiruhiko Kuroda’s comments. As a result, USD/JPY reversed and re-tested the barrier of 100. Will we see further deterioration in the coming days?

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

• EUR/USD: long (a stop-loss order at 1.1114; initial upside target at 1.1327)
• GBP/USD: none
• USD/JPY: none
• USD/CAD: short (a stop-loss order at 1.3346; initial downside target at 1.2876)
• USD/CHF: none
• AUD/USD: none

EUR/USD

From the medium-term perspective, we see that EUR/USD extended gains and climbed above the last week’s high, which suggests further improvement – especially if the Stochastic Oscillator generates a buy signal in the coming week.

Will we see such price action? Let’s examine the daily chart and find out whether it confirms the above scenario or not.

Looking at the daily chart we see that although EUR/USD pulled back on Thursday, buy signals generated by the indicators encouraged currency bulls to act, which resulted in a rebound on Friday. Earlier today, the pair moved higher once again, which means that what we wrote on Thursday is up-to-date:

(…) the CCI and Stochastic Oscillator generated buy signals, which suggests higher values of EUR/USD in the coming days. If this is the case, the first upside target would be around 1.1284, where the upper border of the blue consolidation is. If this resistance is broken, we’ll see an increase to the orange declining resistance line based on the previous highs (currently around 1.1300) or even a rally to the brown medium-term resistance line in the coming days.

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

Long positions (with a stop-loss order at 1.1114 and initial upside target at 1.1327) 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

On the above charts, we see that although USD/JPY rebounded in the previous week, the exchange rate reversed and declined earlier today, which means that what our Thursday’s commentary is up-to-date also today:

(…) we think that as long as there won’t be buy signals generated by the indicators another downswing and a test of the green support line based on the Jun and Aug lows can’t be ruled out.

Very short-term outlook: bearish
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

The situation in the medium term remains almost unchanged as USD/CHF is wavering between Sep high and low.

What can we infer from the very short-term chart? Let’s check.

On the daily chart, we see that USD/CHF gave up some gains, which triggered further deterioration earlier today. Therefore our last commentary on this currency pair remains valid:

(…) Although, the blue support line triggered a rebound, sell signals are still in play, which suggests that another downswing and a re-test of the blue line is likely in the coming days.

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.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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