Today's ECB statement brought significant monetary easing, and also called for fiscal action. The common currency plunged before recovering sharply. What position does such action leave it in? And what about the other pairs where we have quite a few open positions to watch?

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

• EUR/USD: none
• GBP/USD: long (a stop-loss order at 1.2139; the initial downside target at 1.2467)
• USD/JPY: none
• USD/CAD: none
• USD/CHF: short (a stop-loss order at 0.9996; the initial downside target at 0.9768)
• AUD/USD: long (a stop-loss order at 0.6751; the exit target at 0.6916)

EUR/USD moved sharply lower earlier today and tested the early-September low. Despite this deterioration, the buyers managed to withstand the selling pressure, and a sharp rebound followed.

As a result, the pair erased almost the entire previous decline and came back to the blue consolidation. What's next? If the bulls manage to push the exchange rate above the upper border of the consolidation based on the previous peaks, we could see a post double-bottom increase in the following days.

Nevertheless, should we see the bulls' weakness, another attempt to move lower and a retest of recent lows can't be ruled out.

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

While USD/JPY reached the upper border of the declining grey trend channel and moved a bit above it, it then invalidated the breakout and pulled back. But the pair rebounded in the following hours, which suggests that we'll see another attempt to move above this resistance shortly.

If the bulls win, the way to the 50% Fibonacci retracement or even up to the orange resistance zone could be open. But should the buyers fail again, we could see a reversal and a comeback to the previously-broken upper border of the declining red trend channel in the following days.

Which scenario is more likely? Taking into account the current position of the daily indicators, it seems that the room for gains is limited and that the sellers could take over in the very near future. If we see such price action, we'll consider opening short positions.

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

AUD/USD extended gains and broke above the 50% Fibonacci retracement earlier today, suggesting that our Tuesday's commentary is up-to-date also today:

(...) as long as there are no sell signals, another attempt to move higher is likely and a test of the orange resistance zone created by two important Fibonacci retracements (the 61.8% one and the 38.2% one based on the entire 2019 decline) can't be ruled out in the very near future.

Trading position (short-term; our opinion): Long positions with a stop-loss order at 0.6751 and the exit target at 0.6916 are justified from the risk/reward perspective.

Summing up the Alert, the euro made a U-turn following the ECB monetary policy pronouncements, reverting back inside its recent consolidation. The British pound continues to trade close to unchanged, and the long position remains justified. USD/CHF has reversed lower today, and the short position remains justified. AUD/USD keeps going up, with the daily indicators favoring continuation of the move higher. The profitable long position remains justified from the risk-reward point of view. Should we see USD/JPY bears decisively take over at the upcoming resistance, we'll consider opening short positions. Apart from these, there're no other opportunities worth acting upon in the currencies. As always, we'll keep you - our subscribers - informed.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist