Yesterday, the greenback extended losses against the Swiss franc, which resulted in a fresh 2017 low. Will we see further deterioration 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: long (a stop-loss order at 107.62; the initial upside target at 113.08)
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Looking at the above charts, we see that the situation remains almost unchanged as EUR/USD is still wavering around the upper border of the blue consolidation (seen on the daily chart) below the yellow resistance zone marked on the weekly chart. Taking this fact into account, we believe that what we wrote on Tuesday is up-to-date:

(…) the yellow resistance zone marked on the weekly chart (…) encouraged currency bears to act, which resulted in a pullback (…) Thanks to this drop, the exchange rate slipped under the previous highs, which is a negative event. (…) if the pair closes today’s session inside the consolidation (…) it will likely trigger further deterioration in the coming days, but until this time, waiting at the sidelines for a profitable opportunity is justified from the risk/reward perspective.

Very short-term outlook: mixed
Short-term outlook: mixed with bearish 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.

USD/CHF

Looking at the daily chart, we see that the overall situation deteriorated slightly since Monday as USD/CHD dropped under the lower border of the orange declining trend channel once again. Thanks to this decline, the pair also slipped slightly below the green support zone created by the 76.4% and 78.6% Fibonacci retracements. Despite this downswing, currency bulls pushed the exchange rate a bit higher earlier today, but it looks more like verification than the beginning of a new upward move. If this is the case, one more downswing and a test of the 38.2% Fibonacci retracement marked on the weekly chart is likely.

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.

AUD/USD

On Monday, we wrote the following:

(…) the exchange rate also came back above the upper border of the red declining trend channel, which triggered further improvement earlier today. Taking these facts into account and the buy signals generated by the indicators, we think that AUD/USD will move higher and test the recent highs and the yellow resistance zone in the coming days.

From today’s point of view, we see that the situation developed in line with the above scenario and AUD/USD extended gains, reaching our upside target earlier today. What’s next? Although this area could pause further rally (especially when we factor in the upper border of the blue rising trend channel), it seems to us that as long as there are no sell signals generated by the indicators another attempt to move higher is likely. This scenario is also reinforced by the size of recent candlesticks, which shows that currency bulls are strong. Therefore, if the exchange rate breaks above the nearest resistance area the next upside target will be around 0.7585-0.7608, where the 61.8% Fibonacci retracement and the April highs are.

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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