Although the U.S. dollar moved higher against the Swiss franc earlier this week, USD/CHF reversed and declined after investors took profits from the greenback’s recent rally. But did this move change anything in the overall picture of the exchange rate?

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

• EUR/USD: none
• GBP/USD: short (stop-loss order at 1.4785; initial downside target at 1.4220)
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Looking at the weekly chart, we see that the situation hasn’t changed much as EUR/USD is still trading under the previously-broken support/resistance line based on the March and Apr 2015 lows.

Will the very short-term picture give us more clues about future moves? Let’s check.

Yesterday, we wrote the following:

(…) EUR/USD moved lower once again and dropped slightly below the green zone (created by the late Mar lows and the lower border of the red wedge) yesterday. Despite this deterioration, the proximity to the 61.8% Fibonacci retracement encouraged currency bulls to act, which resulted in a comeback to the declining wedge earlier today. Additionally, the current position of the CCI and Stochastic Oscillator suggests that the space for declines may be limited and reversal is just around the corner.

From today’s point of view, we see that the situation developed in line with the above scenario and currency bulls pushed the exchange rate higher earlier today. With this move, EUR/USD broke above the upper border of the declining wedge, which is a positive signal that suggests further improvement and a climb to the late-Apr lows (at 1.1217-1.1221). If this resistance area is broken, the next upside target would be around 1.1314, where the 32.8% Fibonacci retracement (based on the recent downward move) and the May 18 high are. This pro growth scenario is also reinforced by buy signals generated by all indicators. Nevertheless, in our opinion, such price action would be more likely and reliable if the exchange rate closes the day above the upper border of the declining wedge.

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/JPY

Although the red support line (parallel to the upper red line based on the Feb and Mar highs) triggered a rebound in recent days, the blue resistance line (based on the previous highs), green support/resistance line (based on the recent lows) and the 23.6% Fibonacci retracement continue to keep gains in check. Therefore as long as there won’t be a daily closure above them, further improvement is questionable and another downswing should not surprise us. At this point it is also worth noting that if the pair drops under the lower red line, we’ll likely see a test of the green support zone created by the mid-May lows (around 108.21-108.47) in the following day(s).

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

On the daily chart, we see that although USD/CHF climbed slightly above the yellow resistance zone, currency bulls didn’t manage to hold gained levels, which resulted in reversal and a comeback to the consolidation. Additionally, all indicators generated sell signals, suggesting that lower values of the exchange rate are just around the corner. Therefore, if USD/CHF declines from this area, the initial downside target would be the orange zone, which serves now as the nearest support.

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

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