Although the U.S. dollar increased recently against its Canadian counterpart, currency bulls didn’t manage to trigger an upward move above the 61.8% Fibonacci retracement for the third time in a row. Will their nearest ally be able to stop the selling pressure once again in the coming days?

EUR/USD Meets Fibonacci Retracement

Yesterday, we wrote that EUR/USD invalidated the earlier breakdown under the upper line of the orange declining trend channel. Taking this positive development into account and combining it with the lack of the sell signals, we think that further improvement is still ahead of us.

If this is the case and the pair moves higher from current levels, we’ll see at least a test of the 38.2% Fibonacci retracement (around 1.5000). If it is broken, the way to our initial upside target, the October 22 peak and the next retracement will be open.

From today’s point of view, we see that the situation developed in tune with our assumptions and EUR/USD moved sharply higher earlier today, reaching our first upside targets – the 38.2% Fibonacci retracement and making our long positions even more profitable.

Thanks to today’s upswing, the pair also broke above the short-term red declining resistance line based on the September 26 and the mid-October peaks, which increases the probability that we’ll see further improvement in the very near future – especially when we factor in the fact that there are still no sale signals that could encourage currency bears to act.

And speaking about indicators… the medium-term CCI and the Stochastic Oscillator generated buy signals (seen on the weekly chart below), supporting the buyers and (at least) an increase to our upside targets in the following days.

USD/JPY – Sharp Decline and Its Consequences

In our yesterday’s alert, we wrote that USD/JPY climbed to our upside target, but then reversed and pulled back, invalidating the earlier tiny breakout above the 61.8% Fibonacci retracement. Such price action together with the current position of the indicators suggests that another move to the downside from here is likely.