Euro looks to be dealing us yet another day characterized as more of the same. Many of you would ask here, does the upswing have legs? Or is it rather a dead cat bounce? Armed with insights to the teeth, it still requires patience to let the market reveal its true colors. Not asleep at the wheel in the meantime, we carefully examine the standing of our other open positions. High time to update you.

• EUR/USD: half of earlier existing short positions (a stop-loss order at 1.1330; the next downside target at 1.1180)
• GBP/USD: none
• USD/JPY: short (a stop-loss order at 112.32; the initial downside target at 109.82)
• USD/CAD:long (a stop-loss order at 1.3247; the initial upside target at 1.3530)
• USD/CHF: none
• AUD/USD: none

EUR/USD

Attempting to build on yesterday’s upside momentum, EUR/USD extended gains earlier today. The result is a climb above the yellow resistance zone the importance of which we discussed yesterday:

(…) the very short-term yellow resistance zone created by three Fibonacci retracements: the 61.8% based on the Thursday’s sharp decline, the 38.2% based on the late-February-early March downward move and the 23.6% based on the entire October-March move.

Despite this improvement, the combination of the 76.4% and 78.6% Fibonacci retracements stopped the buyers. As long as we don’t see any breakout above the peak of Thursday’s candlestick, it looks like another attempt to move lower is just around the corner.

If that’s indeed the case, we’ll likely see at least a test of the last week’s lows or even the lower border of the blue declining trend channel in the following days.

Trading position (short-term; our opinion): profitable half of earlier existing short positions with a stop-loss order at 1.1330 and the next downside target at 1.1180 are justified from the risk/reward perspective.

USD/JPY

USD/JPY looks to be striving hard to remain inside the pink rising wedge. Bouncing a bit yesterday but the upside move appears to be fizzling out as the pair currently trades at around 111.20.

It means that USD/JPY is moving lower once again and trades back below the lower border of the pink wedge. This increases the likelihood of further deterioration in the coming days.

Should we see a daily close below the above mentioned wedge border, the pair will likely extend losses and test the lower border of the blue rising trend channel (currently at around 109.93). Additionally, there’s the 50% Fibonacci retracement nearby. Considering the size of the pink wedge in approximating the potential price target, with sufficient commitment currency bears can comfortably push USD/JPY down to around 109.94.  That’s as close as it gets in target setting really – both approaches are giving virtually identical targets.

Trading position (short-term; our opinion): Short positions with a stop-loss order at 112.32 and the initial downside target at 109.82 are justified from the risk/reward perspective.

USD/CAD

We observed USD/CAD attempting to extend gains late in the previous week that were met with a subsequent pullback. We mentioned on Friday that this:

(…) could be nothing more than a verification of the earlier breakout above the yellow resistance zone.

Indeed,  this still looks to be the case today. Therefore, as long as there is no daily close below the yellow resistance-turned-support zone, another attempt to move higher wouldn’t surprise us in the least. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

Trading position (short-term; our opinion): Long positions with a stop-loss order at 1.3247 and the initial upside target at 1.3530 are justified from the risk/reward perspective.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist