The euro bulls have repelled the bears' attack yesterday though the bears are again making headway. Will they be able to break through today? The Philadelphia Fed Manufacturing Index surprised on the upside, lending support to the U.S. currency. Our short euro position became more profitable in return. How does our other open position do? Just great. We have also identified a prospective candidate for opening a brand new position. Get ready!

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

• EUR/USD: short (a stop-loss order at 1.1289; the initial downside target at 1.1147)
• GBP/USD: none
• USD/JPY: none
• USD/CAD: short (a stop-loss order at 1.3545; the initial downside target at 1.3363)
• USD/CHF: none
• AUD/USD: none

EUR/USD

EUR/USD has certainly moved lower yesterday. The bears took the rate almost to the rising purple support line, close to the lower border of the orange support zone. The combination of these factors spurred the bulls into action and the pair closed the day with only slight losses.

Earlier today, the bulls have been building upon yesterday's momentum and took the pair to the gap as marked by the red horizontal zone. This line is keeping their gains in check, sending the pair lower to below 1.1200 currently.

Let's see the daily indicators now. They' re still on their sell signals, supporting the sellers. This suggests that another move to the downside is just around the corner. Should we see such price action, the sellers' first target would again be the rising purple support line. If that´s broken, then our initial downside target is the second objective.

Trading position (short-term; our opinion): Short positions with a stop-loss order at 1.1289 and the initial downside target at 1.1147 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/CAD

We have written on Tuesday these words about the combination of major short-term resistances:

(..) This resistance is marked by the combination of the 70.7% Fibonacci retracement, the upper border of the purple rising trend channel, the previous highs and the upper border of the red declining trend channel.

In all previous instances, the bulls haven't had much success breaking higher. It increases the likelihood of seeing another reversal down the road this time, too. Lower USD/CAD values remain likely in the very near future.

The pair has turned south, making our short position even more profitable earlier today. The pair is trading at around 1.3420 as we speak. Should the bears push the rate below the lower border of the green consolidation on a closing basis, we're likely to see further deterioration. A test of the recent lows, the 38.2% Fibonacci retracement, or even the lower line of the red declining trend channel is not out of the question in the coming days.

Trading position (short-term; our opinion): Short positions with a stop-loss order at 1.3545 and the initial downside target at 1.3363 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

In our Tuesday's commentary on this pair, we have questioned how low can the bears bring the price down:

(...) How far down could the bears take the pair?

Actually, not that far it seems. Look at the lower border of the red declining trend channel and then the 70.7% Fibonacci retracement. Additionally, the RSI approached the level of 30, while the CCI and the Stochastic Oscillator moved to their oversold areas, increasing the probability of issuing buy signals in the following days.

The exchange rate went on to extend losses in the last few days and also broke below the lower border of the red declining trend channel on an intraday basis earlier today. The bulls have countered and the pair looks stabilized right now at the lower border of this trend channel.

This increases the likelihood of further improvements in the coming days. Additionally, the RSI flattened around the level of 30, the Stochastic Oscillator generated a buy signal, while the CCI keeps moving higher in its oversold area, increasing the probability of it also issuing a buy signal in the following days.

Connecting the dots, the downside momentum may be nearing its exhaustion. Should we see bullish signs such as a daily close comfortably above the lower border of the red declining trend channel and also a breakout above the brown declining resistance line, 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.

Summing up the Alert, while the euro bears haven't broken below the supports at first try, the bulls' response seems to have stalled. The pair appears to be rolling over again and our short position remains profitable and justified. USD/CAD bulls have also given up their previous gains and we didn't have to wait long for lower values of the pair. Again, our profitable short position remains justified. Should AUD/USD bulls show reliable signs of strength as described above, we'll consider opening long positions. 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