Earlier today, the U.S. currency moved little lower against major currencies as investors looked ahead to Wednesday’s minutes of the Federal Reserve’s July meeting. Will they receive more clues about Fed’s plans to hike short-term interest rates? Before we know the answer to this question, let’s examine the current picture of EUR/USD, USD/JPY and USD/CHF.
In our opinion the following forex trading positions are justified - summary:
EUR/USD
Although EUR/USD moved little lower, the situation in the medium term hasn’t changed much as the exchange rate remains above the previously-broken long-term red declining resistance line.
Will the very short-term picture give us more clues about future moves? Let’s check.
Looking at the daily cart, we see that EUR/USD remains under the previously-broken orange support/resistance area, which means that our last commentary on this currency pair remains up-to-date:
(…) EUR/USD moved lower, breaking under the orange support area. This negative sign, in combination with sell signals generated by the indicators, suggests that the pair will likely test the lower border of the blue consolidation in the coming day(s). If this support is broken the next downside target would be the red declining line, which is slightly below the psychological barrier of 1.1000.
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 at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
USD/JPY
The medium-term picture hasn’t changed much as USD/JPY is still trading around the June 2007, which makes the situation a bit unclear.
Will the very short-term chart give us more clues about future moves?
Not really, because USD/JPY is still trading in the blue consolidation. Therefore, in our opinion, a daily closure above/below the upper/lower border of the formation will indicate the direction of future moves. If currency bears win, and we see a successful drop not only below the lower line of the consolidation, but also under the June 2007 high (124-124.13), the initial downside target would be around 123.41, where the 38.2% Fibonacci retracement (based on the Jul-Aug rally) is. On the other hand, a breakout above the recent high will likely trigger a test of the Jun high of 125.84 or even the green resistance line, which stopped the rally in mid-Aug.
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
On the weekly chart, we see that although USD/CHF moved little higher, the pair remains under the previously-broken orange resistance line, which means that an invalidation of the breakout above it and its negative impact on the exchange rate is still in effect, suggesting another attempt to move lower.
Can we infer something more from the very short-term chart? Let’s check.
From today’s point of view we see that the situation hasn’t changed much since our last commentary on this currency pair was posted. As you see on the daily chart, USD/CHF is trading in the blue consolidation, slightly above the lower border of the rising trend channel. Nevertheless, taking into account the medium-term resistance, it seems to us that we’ll see another test of the brown support line in the coming days. However, at this point, it is also worth noting that as long as there is no daily close below this line a reversal and rebound from this support is likely.
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
Gold & Silver Trading Alerts
Forex Trading Alerts
Oil Investment Updates
Oil Trading Alerts
