Yesterday, the U.S. dollar extended losses against the Swiss franc, which resulted in a drop to the lowest level since mid-August 2016. Will we see reversal and higher values of USD/CHF in the coming days?

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

• EUR/USD: none
• GBP/USD: short (a stop-loss order at 1.3232; the initial downside target at 1.2375)
• USD/JPY: none
• 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; therefore, our previous commentary remains up-to-date also today:

(…) EUR/USD moved sharply higher earlier this week, which resulted in a breakout above two major red resistance lines. This bullish development suggests that we’ll likely see a test of the May 2016 high of 1.1615 in the very near future.

In this area is also the upper border of the brown rising trend channel, which together could stop currency bulls in the coming day(s). Nevertheless, if this resistance area is broken, the way to the August 2015 high of 1.1713 and the 112.8% Fibonacci extension of 1.1780 will be open.

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.

USD/CAD

Yesterday, USD/CAD extended losses, which resulted in a fresh multi-month low and a small drop below the 141.4% Fibonacci extension, which means that what we wrote on July 13 remains up-to-date also today:

(…) What’s next? (…) taking into account the height of the trend channel (marked with yellow), we should (…) consider further deterioration and a drop to the green support zone (based on the late April and May 2016 lows) in the coming week(s) (in this area the size of the move will correspond to the height of the trend channel).

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/CHF

Quoting our previous commentary on this currency pair:

(…) although USD/CHF increased above the red declining resistance line in the previous weeks, these improvements were temporary and the exchange rate pulled back in both cases, closing the whole week under this line. Such price action triggered further deterioration earlier this week, which suggests that we may see a test of the June low (…) This scenario is also reinforced by the very short-term picture (…) because (…) although the exchange rate slipped to the blue support zone, the sell signals generated by the indicators are still in play, supporting currency bears and another attempt to move lower. Therefore, if we see a drop from here, the nearest downside target will be the lower border of the orange declining trend channel, which intersects the green support zone at the moment of writing these words.

Looking at the charts, we see that the situation developed in line with the above scenario and USD/CHF extended losses, reaching our downside target. What’s next? Taking into account the combination of supports (the lower border of the orange declining trend channel and the green support zone), it seems that reversal is just around the corner. However, in our opinion, as long as there is no confirmed breakout above the red declining resistance line, another sizable move to the upside is not likely to be seen.

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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