Forex Trading Alert originally sent to subscribers on March 12, 2015, 11:54 AM.
Earlier today, the Commerce Department showed that retail sales fell 0.6% in the previous month, which was the third consecutive monthly decline. Additionally, core retail sales (without automobiles, gasoline and food) were flat following a 0.1% decline in January. Thanks to these disappointing numbers the USD Index declined from a fresh 2015 high, slipping under the barrier of 100. How did this drop affect the euro?
In our opinion the following forex trading positions are justified – summary:
- EUR/USD: none
- GBP/USD: none
- USD/JPY: none
- USD/CAD: short (stop loss order at 1.2876)
- USD/CHF: none
- AUD/USD: none
Quoting our previous Forex Trading Alert:
(…) EUR/USD (…) slipped under the long-term green support line (based on the Oct 2000 and Jul 2001 lows). This is a solid negative signal, which suggests further deterioration in the coming day(s). How low could the exchange rate go? (…) the next target for currency bears will be around 1.0517, where the 70.7% Fibonacci retracement is.
Looking at the charts, we see that the situation developed in tune with the above-mentioned scenario and EUR/USD dropped to our downside target earlier today. Despite this deterioration, the exchange rate reversed and rebounded slightly in the following hours, which resulted in an invalidation of the breakdown under the 70.7% Fibonacci retracement. Although this is a positive signal, we should keep in mind that the exchange rate still remains under the previously-broken long-term green and medium-term red resistance lines. In our opinion, as long as there is no comeback above these lines further improvement is questionable and another downswing (and a test of yesterday low) should not surprise us.
Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed
Trading position (short-term; our opinion): 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.