Although the jobless rate unexpectedly dropped to 4.1%, from 4.2%, the monthly employment report showed that non-farm payrolls increased by 261,000 in the previous month, missing expectations of 310,000 jobs. Thanks to these mixed numbers, the USD Index is trading in a narrow range around 94.50. Will we see a stronger greenback and a weaker euro or vice-versa?

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

• EUR/USD: short (a stop-loss order at 1.2250; the initial downside target at 1.1510)
• GBP/USD: short (a stop-loss order at 1.3773; the next downside target at 1.3000)
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Looking at the daily chart, we see that EUR/USD wavers in a narrow range around the green horizontal line based on the mid-August and early October lows. Nevertheless, in our opinion, as long as there is no daily closure above this resistance all upswings could be nothing more than verifications of the earlier breakdown below this line.

What does it mean for the exchange rate? In our opinion, if this is the case and EUR/USD reverses from current levels in the near future, currency bears will likely not only test the recent lows, but also push the exchange rate to around 1.1508, where the size of declines will be equal to the height of the brown rising trend channel. Additionally, slightly below this level is also the 38.2% Fibonacci retracement, which increases the probability of reversal.

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

Trading position (short-term; our opinion): Short profitable positions (with a stop-loss order at 1.2250 and the initial downside target at 1.1510) 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

On the daily chart, we see that although USD/climbed above the upper border of the blue rising wedge and the 61.8% Fibonacci retracement on Wednesday, currency bears didn’t give up and pushed the pair lower yesterday.

As a result, the exchange rate invalidated the earlier breakout (similarly to what we saw at the end of the previous month), which suggests lower values of USD/CHF in the coming days. If this is the case and we see a decline from current levels, currency bears will likely test the lower border of the rising wedge in the coming week.

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.

AUD/USD

On Monday, we wrote the following:

(…) What’s next? On the weekly chart, we see that the last week decline took the exchange rate to the 38.2% Fibonacci retracement based on the entire 2017 upward move, which will likely trigger a rebound in the coming week – especially when we factor in the proximity to the blue rising support line and the 61.8% Fibonacci retracement, which together stopped bears in the previous week. The pro bullish scenario is also reinforced by the current positions of the daily indicators (the Stochastic Oscillator generated buy signals, while the RSI and the CCI are very close to doing the same).

How high could the pair go? In our opinion, the first upside target for currency bulls will be around 0.7726-0.7747, where the previously-broken green horizontal lines are.

From today’s point of view, we see that the situation developed in line with the above scenario and AUD/USD increased to our upside target yesterday. Despite this improvement, currency bulls didn’t manage to push the pair higher, which encouraged their opponents to act. As a result, the exchange rate reversed and declines, which suggests a test of the Fibonacci retracements and the recent low in the coming day(s).

Very short-term outlook: mixed with bearish bias
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.

Thank you.

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

Gold & Silver Trading Alerts
Forex Trading Alerts
Oil Investment Updates
Oil Trading Alerts