While many of the day-to-day euro declines have been nothing to write home above, they add up, putting the bulls in a difficult position. They better show some strength, and fast. Will it coincide with the next British pound's upswing? And how likely is that, exactly?

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

• EUR/USD: none
• GBP/USD: none
• USD/JPY: none
• USD/CAD: short (a stop-loss order at 1.3353; the initial downside target at 1.3144)
• USD/CHF: none
• AUD/USD: none

EUR/USD

Earlier today, EUR/USD has opened with a bearish red gap while the Stochastic Oscillator has flashed its sell signal. Both signs suggest further deterioration.

Let's quote what we wrote yesterday about the bulls' attempt to go higher:

(...) the bulls tried to take the pair higher, but the exchange rate still trades inside the blue consolidation. This suggests that we could see a test of the lower border of the formation and the green horizontal support line in the very near future.

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.

GBP/USD

GBP/USD kept its breakout above the orange resistance zone alive yesterday. The pair has climbed to the 38.2% Fibonacci retracement, but didn't break above it though.

Yesterday's upswing took the exchange rate to the upper border of the declining grey trend channel, though the bulls didn't manage to break above it either.

GBP/USD has pulled back earlier today, and the pound now trades close to the upper border of the orange zone. The current position of the daily indicators supports downside move's continuation, which may be just around the corner.

Should we see an invalidation of the earlier breakout above the orange zone, we'll consider opening short positions.

Let's quote our Monday's words about the downside move's target:

(...) The bulls' weakness can translate into a verification of earlier breakouts above both resistances, or (should the daily indicators generate their sell signals) even into a retest of the green support zone.

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 continues trading in a narrow change, and the overall picture remains unchanged. The Stochastic Oscillator is on a sell signal, suggesting one more attempt to move lower and a test of previous lows.

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.

Summing up the Alert, EUR/USD's downswing continues, and it's reasonable to expect a retest of recent supports. While USD/CAD rose yesterday and earlier today such price action looks as nothing more than verification of the earlier breakdown below important supports. The daily indicators also justify the open short positions. Should we see GBP/USD invalidate its recent breakout, 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