Earlier today, the greenback extended losses against the yen, which pushed USD/JPY to a fresh July low. How low could the exchange rate go in the coming days?

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

• EUR/USD: none
• GBP/USD: short (a stop-loss order at 1.3232; the initial downside target at 1.2375)
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Yesterday, we wrote the following:

(…) EUR/USD remains in the blue consolidation not far from the May 2016 high of 1.1615 and the upper border of the brown rising trend channel. What’s next? Taking into account the fact that currency bulls were strong enough to push the exchange rate above the upper border of previous consolidations, it seems to us that we’ll see one more upswing and a test of the above-mentioned resistances before a bigger move to the downside.

From today’s point of view we see that the situation developed in line with the above scenario and currency bulls pushed the exchange rate not only to our upside targets, but also above them, which opened the way to the August 2015 peak of 1.1713. Therefore, another attempt to move higher should not surprise us.

Very short-term outlook: mixed with bullish bias
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed

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.

USD/JPY

Looking at the above charts, we see that the breakdown under the red declining support line encouraged currency bears to act. As you see on the daily chart, a decline below the 38.2% Fibonacci retracement triggered further deterioration and a drop below the next retracement. What’s next? Taking into account an invalidation of the breakout above the red line and a drop below the 50% retracement, we think that the pair will extend losses and test the nearest green support zone in the coming day(s). Nevertheless, if this area is broken, the next target for currency bears will be around 109.46, where the upper border of the next green support zone is.

Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed

No positions are justified from the risk/reward perspective at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

USD/CAD

Yesterday, USD/CAD extended losses, which resulted in a fresh multi-month low and a small drop below the 150% Fibonacci extension, which means that what we wrote on July 13 remains up-to-date also today:

(…) What’s next? (…) taking into account the height of the trend channel (marked with yellow), we should (…) consider further deterioration and a drop to the green support zone (based on the late April and May 2016 lows) in the coming week(s) (in this area the size of the move will correspond to the height of the trend channel).

Very short-term outlook: mixed with bearish bias
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed

No positions are justified from the risk/reward perspective at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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