The USD is not really yielding ground today either. In return, the euro is taking a breather. How will its current pause at an important weekly support end? The daily chart reveals an important story here that we want to tell you. It's important for our open position. And what about the other profitable positions and opportunities?

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

• EUR/USD: short (a stop-loss order at 1.1204; the next downside target at 1.1130)
• GBP/USD: none
• USD/JPY: none
• USD/CAD: short (a stop-loss order at 1.3545; the next initial downside target at 1.3352)
• USD/CHF: none
• AUD/USD: none

EUR/USD

The weekly perspective shows that EUR/USD is so far moving higher and the exchange rate came back above the long-term rising green support line. This move will however only have implications should the pair finish the month of May higher than this important support line is.

Yesterday, EUR/USD extended losses and hit our previous downside target of 1.1147. This is where we have closed 50% of the earlier full and profitable short position on Monday, May 20.

Earlier today, the pair has moved slightly higher but still trades visibly below the previously-broken purple resistance line. As long as it keeps trading below it, one more move to the downside remains likely. Especially so, when we factor in the immediate reversal of upside momentum as soon as it had emerged. Such a spurt higher served only to verify the previous breakdown below the purple resistance line.

Trading position (short-term; our opinion): 50% of short positions (this is the remaining half of the full short positions as we have closed the previous profitable 50% on May 20) witha stop-loss order at 1.1204 and the downside target at 1.1130 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

On the weekly chart, USD/CAD is still trading inside the blue consolidation. It has already however dropped below the upper border of the previously-broken yellow consolidation. This means invalidation of the earlier breakout.

It is a negative sign for the bulls. The sell signals of the weekly indicators also continue to favor the bears.

The daily perspective also shows the exchange rate having extended losses. It broke below the lower border of the green consolidation already yesterday. This has strengthened the bearish outlook and today's deterioration points to a test of the green horizontal support line based on the May 1 lows as a minimum.

Earlier in the month, these lows have encouraged the bulls to act, yet the strong combination of nearby resistances repeatedly stopped them. The bulls didn't have any success overcoming the 70.7% Fibonacci retracement, the upper border of the rising purple trend channel, the previous highs and the upper border of the declining red trend channel.

Coupled with the sell signals of the daily indicators and the weekly chart outlook, lower values of USD/CAD are likely just around the corner. If the situation develops accordingly, the pair will probably test the lower border of the declining red trend channel and the 38.2% Fibonacci retracement in the very near future.

Reflecting all the above, we have decided to move our initial downside target lower to 1.3352.

Trading position (short-term; our opinion): Profitable short positions with a stop-loss order at 1.3545 and the initial downside target at 1.3352 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

The weekly chart shows AUD/USD to be still trading below the upper border of the red declining trend channel.

The daily chart reveals that AUD/USD has moved lower yesterday and retested the support area created by the purple support line (that is based on the late-January and early-March lows) and both the 76.4% and 78.6% Fibonacci retracements.

Earlier today, the bulls have attempted to move higher but at the moment of writing these words, they've given up all their gains. The pair trades at around 0.6880 currently.

The daily indicators however point in the direction of an improvement. Such price action will be more likely and reliable only if we see a daily close above the lower border of the declining red trend channel (as shown on the daily chart) combined with a breakout above the declining brown resistance line.

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, but should we see a daily close above the lower border of the declining red trend channel and a breakout above the declining brown resistance line, we'll consider opening long positions. Stay tuned.

Summing up the Alert, despite yesterday's indecisive price action in the euro, the outlook favors the bears and our short position remains justified. USD/CAD continues on its journey south and our already profitable short position is also becoming even more so in the green. Should AUD/USD bulls show strength in overcoming both nearest resistances, we'll consider opening a long position. 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