Earlier today, the U.S. dollar moved higher against major currencies as tensions over the military action in Ukraine eased after Russian President Vladimir Putin statement. What impact did it have on major currency pairs? What is their current outlook? If you want to know our take on this question, we invite you to read our today's Forex Trading Alert.

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

• EUR/USD: EUR/USD: none
• GBP/USD: GBP/USD: none
• USD/JPY: USD/JPY: none
• USD/CAD: USD/CAD: none
• USD/CHF: USD/CHF: none
• AUD/USD: AUD/USD: none

EUR/USD

On the above chart, we see that the situation has deteriorated as the exchange rate dropped below the previously-broken lower border of the rising trend channel. Yesterday, the currency pair didn’t manage to push above this level, which triggered a sharp decline to around Feb.27 high. Although this support level encouraged buyers to act, the exchange rate gave up the gains earlier today. At this point, it’s worth noting that the recent candlesticks formed a bearish engulfing pattern, which supports sellers at the moment. Additionally, all indicators generated sell signals, which suggests that further deterioration is just around the corner. If we see such price action, the first downside target will be around Friday low.

Let’s zoom our picture and focus on the 4-hour chart. Will it give us any interesting clues?

Looking at this chart, we see that EUR/USD reached yesterday’s low, which is slightly below a support level created by the Feb.27 high. If this area is broken, we will likely see further deterioration and the downside target for the sellers will be the 38.2% Fibonacci retracement level based on the recent ray, which corresponds to the Friday low. Additionally, slightly below this zone is also the lower border of the rising trend channel, which may pause or even stop further deterioration.

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

Trading position (short-term): In 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.

GBP/USD

Looking at the above chart, we see that although GBP/USD declined below the upper line of the rising wedge, we saw another attempt to move above this level earlier today. Despite today’s upswing, the buyers failed and the exchange rate declined once again. From this perspective, it seems that we will likely see another try to reach the 38.2% Fibonacci retracement level. This scenario is currently reinforced by the position of the indicators ( sell signals remain in place supporting sellers).

Just like yesterday, before we summarize this currency pair, let’s taka closer look at the 4-hour chart.

From this perspective, we see that GBP/USD declined and reached the rising green support line (which is also a lower border of a small rising channel) yesterday. This support level, encouraged buyers to push the order button, which resulted in an increase in the following hours. As you see on the above chart, this improvement was temporary and the pair reversed, reaching the very short-term green support line once again. If the sellers manage to successfully break below it, we will likely see a drop to the 38.2% Fibonacci retracement or even to Feb.24 low.

Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed

Trading position (short-term): In 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

As you see on the daily chart, although USD/JPY closed the day below the lower border of the rising wedge (marked with light blue) once again, the pair rebounded sharply earlier today. Thanks to this upswing, the exchange rate came back to the major very short-term resistance line. If this blue line encourages sellers, we may see another attempt to reach February low. However, if it is broken, we will likely see further improvement and the first upside target will be the 38.2% Fibonacci retracement (slightly above this level is a resistance zone created by the Jan.13 low and Jan.31 high, which successfully stopped further improvement in February). Please note that a pro growth scenario is currently reinforced by the position of the indicators (the CCI and Stochastic generated buy signals, while the RSI increased above the level of 40), so another attempt to move higher should not surprise us.

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

Trading position (short-term): In our opinion, the situation is too unclear to go short or long at the moment. So, no positions are justified from the risk/reward perspective. However, if the resistance zone, the upper line of the rising wedge and the red declining resistance line are broken, we will consider opening long positions. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

USD/CAD

As you see on the daily chart, the situation hasn’t changed much as USD/CAD still remains in the consolidation range. From this perspective, it seems that as long as there is no breakout above the Feb.27 high or breakdown below yesterday’s low, the very short-term outlook will be mixed. Please note that if the buyers do not give up and invalidate the reversal candlestick formation (a daily close above 1.1158), we may see an upward move even to the January high. However, if they fail and the exchange rate closes the day below the Feb.24 low, we may see further deterioration and a drop to the lower border of the rising trend channel, which corresponds to a support zone created by Jan.22, Feb.7 and Feb13 lows. Looking at the position of the indicators, we see that they reversed and support buyers.

Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: bullish
LT outlook: bearish

Trading position (short-term): In 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

Quoting our previous Forex Trading Alert:

(…) the exchange rate reached not only the next support zone (…), but also hit a fresh 27-month low (…) the sellers realized a bearish scenario after a breakdown below the lower border of the triangle (marked with light orange). If this area encourages buyers to act, we may see a corrective upswing in the coming day (or days).

Looking at the above chart, we see that the situation has improved as USD/CHF rebounded sharply, broke above the green declining resistance line and reached the previously-broken short-term resistance line (marked with blue). It this important resistance is broken, we may see further improvement and the upside target for buyers would be the red declining resistance line. This pro growth scenario is currently reinforced by the indicators, which generated buy signals.

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

Trading position (short-term): In our opinion, the situation is too unclear to go long or short at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

AUD/USD

In our last Forex Trading Alert, we wrote:

(…) an invalidation of a breakout is a bullish signal, which suggests that we may further improvement (especially when we take into account the fact that the CCI and Stochastic Oscillator are very close to generating buy signals). If this is the case, we will likely see an upswing to the previously broken the very short-term rising support/resistance line (marked with green).

As you see on the above chart, although AUD/USD extended gains earlier today, the pair still remains below the green resistance line and the upper line of a declining trend channel (marked with red). From this perspective, it seems that as long as the exchange rate remains below these lines, another attempt to move lower can’t be ruled out.

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

Trading position (short-term): In 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
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