Yesterday, the greenback moved sharply higher against its Canadian counterpart as the price of crude oil slipped to the lowest level since late Apr, weighing on the Canadian currency. Thanks to these circumstances, USD/CAD broke above important resistance zone and closed the day above it. Will we see further rally in the coming days?
In our opinion the following forex trading positions are justified - summary:
- EUR/USD: short (a stop-loss at 1.1236; initial downside target at 1.0708)
- GBP/USD: short (a stop-loss at 1.3579; initial downside target at 1.2519)
- USD/JPY: none
- USD/CAD: none
- USD/CHF: none
- AUD/USD: none
Looking at the daily chart, we see that although EUR/USD broke above the upper border of the purple declining trend channel earlier today, this improvement was temporary and the exchange rate reversed and declined, invalidating earlier breakout. This is a negative signal, which suggests further deterioration. However, this scenario will be more reliable if we see a daily closure under the upper line of the formation.
Having said the above, let’s check whether anything changed on the medium-term picture or not.