Yesterday, the U.S. dollar rose against its Canadian counterpart, which pushed the U.S. dollar/Canadian dollar (USD/CAD) currency pair above the upper border of the declining wedge, but can we trust this breakout?
From today’s point of view, we see that the overall situation hasn’t changed much as the euro/U.S. dollar (EUR/USD) currency pair is still trading around yesterday’s levels.
(…) Although monthly and weekly indicators are overbought, currency bulls pushed EUR/USD higher in the previous week, which resulted in a breakout above the 38.2% Fibonacci retracement based on the entire May 2014-January 2017 downward move (the retracement is more visible on the long-term chart) and the 112.8% Fibonacci extension (based on the May 2016- January 2017 downward move).
What does it mean for the exchange rate? In our opinion, such price action suggests that as long as there are no sell signals generated by the indicators, another attempt to move higher can’t be ruled out. Therefore, if the pair moves higher from current levels, the initial upside target will be around 1.1960, where the 127.2% Fibonacci extension is.
Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed