The euro has reversed higher on the prospects of a more ECB accommodative policy ahead. Will it turn out to be a lasting move, or is it just a flash in the pan? Let's take a look together at what makes or breaks the euro recovery. And not only at that. Our AUD/USD short position keeps doing wonders...

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

• EUR/USD: none
• GBP/USD: none
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: short (a stop-loss order at 0.7113; the downside target at 0.6935)

EUR/USD

The pair's pace of decline slowed yesterday as it had reached the next support (the upper border of the green support zone). We wrote these words in our yesterday's Alert:

(...) As long as this support holds, another bigger move to the downside is not likely to be seen and reversal in the very near future should not surprise us.

In the aftermath of today's ECB monetary policy statement, we have seen EUR/USD bounce off the above-mentioned support. The daily indicators are close to generating their buy signals, which increases the probability of further improvement.

If we see further gains accompanied by the bulls' strength, we'll consider opening long positions. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective.

GBP/USD

Yesterday, GBP/USD bounced off the support area created by two green horizontal lines in recent days. Let's recall our Tuesday's commentary on this currency pair:

(...) Should the bulls however stop the bearish onslaught, the possibility of a reverse head and shoulders formation arises - it would carry consequences only if GBP/USD breaks above the recent peaks and both borders of the above-mentioned channels, however.

If we see a daily close above both of these resistances, we'll consider opening long 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

Let's start with our Tuesday's observation on this currency pair:

(...) As the pair came back below the orange resistance zone and invalidated Friday's breakout above this area, further deterioration is probably just around the corner. This conclusion is supported by the sell signals of the daily indicators.

Should the situation develop in tune with the above scenario, AUD/USD will as a minimum test the green support area based on the 38.2% Fibonacci retracement and last week's low (at around 0.6987-0.6996) in the coming days.

The green support area didn't manage to stop the bears, and the way to even lower levels opened up.

Earlier today, AUD/USD has been moving still lower, making our short positions even more profitable. The sell signals remain on the cards, increasing the probability of a test of our downside target in the very near future.

Trading position (short-term; our opinion): Already profitable short positions with a stop-loss order at 0.7113 and the next downside target at 0.6935 are justified from the risk/reward perspective.

Summing up the Alert, EUR/USD has found support in the aftermath of the ECB announcement, and the daily indicators are on the verge of supporting an upside move. Should we see signs of the bulls' strength accompanying the daily indicators' signals, we'll consider opening long positions. AUD/USD downswing goes on, and the daily indicators keep supporting the move lower. Therefore, the short position is justified. 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