Earlier today, the U.S. dollar increased against the British pound to nearly five-week high after U.S. economic data, which showed that the number of building permits issued in the U.S. rose to a four-month high in February, rebounding after a sharp drop in January. What impact did it have on major currency pairs? 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: short (stop-loss order: 1.4008)
• GBP/USD: none
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

As you see on the above chart, although EUR/USD declined earlier today, the exchange rate still remains between Thursday high and low. From this perspective, if the exchange rate extends losses, the next downside target will be the lower border of the consolidation range. Please note that sell signals generated by the RSI and CCI still favor sellers.

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

Trading position (short-term) in our opinion: Short. Stop-loss order: 1.4008. We will keep you informed should anything change as far as our opinion is concerned, or should we see a confirmation/invalidation of the above. The above is not an investment / trading advice and please note that trading (especially using leveraged instruments such as futures or on the forex market) involves risk.

GBP/USD

Looking at the daily chart, we see that the exchange rate declined sharply earlier today. However, despite this drop, the pair still remains above the green line based on recent lows, which serves as major support at the moment. From this perspective, as long as GBP/USD remains above this line (and also above the lower green line), a bigger downswing is not likely to be seen.

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 above chart, USD/JPY reversed after reaching Friday high and declined earlier today. With this downswing, the exchange rate dropped to the green line once again. If this support encourages buyers to act, we may see a corrective upswing (similarly to what we saw yesterday). However, if they fail, the next downside target will be the February low.

Before we summarize this currency pair, let’s take a look at the 4-hour chart.

From this perspective, we see that the exchange rate declined slightly below the green support line, which suggests that the sellers will likely re-test the strength of the Thursday low. Nevertheless, looking at the position of the indicators, it seems that we may see a pause in the following hours.

Very short-term outlook: bearish
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 at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

USD/CAD

Quoting our previous Forex Trading Alert:

(…) all indicators reversed and the CCI and Stochastic Oscillator generated sell signals, which suggests further deterioration. In this case, the first downside target will be the lower border of the rising trend channel (currently around 1.1009).

Looking at the above chart, we notices such price action earlier today. Despite this drop, the sellers didn’t manage to push the exchange rate lower, which resulted in a corrective upswing in the following hours. From this perspective, we see that the pair came back to the consolidation range and it seems that if USD/CAD extends gains, the first upside target will be the upper line of this formation (currently around 1.1121). Nevertheless, we should keep in mind that the indicators still support sellers, which suggest that another test of the strength of the lower border of the trend channel should not surprise us.

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

Looking at the above chart, we see that the situation hasn’t changed much as USD/CHF remains between Thursday high and low. Therefore, what we wrote in our last Forex Trading Alert is still up-to-date.

(…) sellers (…) reached the support zone. If this area encourage buyers to act, we will likely see a corrective upswing in the coming day (or days). However, if it is broken, the next downside target will be around 0.8671, where the 161.8% Fibonacci projection is. The position of the indicators hasn’t changed much. Although there is a positive divergence between the CCI and the exchange rate, the Stochastic Oscillator is oversold and the RSI slipped to its lowest level since the beginning of the month.

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

Trading position (short-term): In our opinion, the space for further declines seems limited, so opening short positions at the moment is not a good idea. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

AUD/USD

As you see on the above chart, AUD/USD extended gains and approached the green resistance line (which currently corresponds to the 2014 high). If this line encourages sellers too act, we may see a decline in the coming day (or days) – similarly to what we saw in the previous week. However, if it is broken, the buyers will likely try to push the exchange rate above the resistance zone created by the December 10 high (in terms of an intraday high and also in daily closing prices). At this point, it’s worth noting that the indicators are almost oversold, which suggests that a pause should not surprise us.

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

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.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
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