My pick: Short Aussie-US dollar at $1.0100
Expertise: Technical analysis
Average time frame of trades: 1 to 6 weeks
Our outlook has turned aggressively bearish in this pair following the formation of a bearish reversal a few weeks back. This now suggests that a major high is in place by $1.0260, with the market looking to potentially carve out a medium-term double top to be confirmed on a break below neckline support at $0.9535. As such, we like the idea of fading rallies to $1.0100. Our strategy is to sell at $1.0100 for a $0.9200 objective; with a stop at $1.0350.
My pick: Short euro-US dollar
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
Euro-dollar is re-testing support turned resistance at a rising trend line set from the lows in June 2010 that was breached to the downside in early December. My bias remains bearish as we look for the US growth to outperform that of the Eurozone, bidding up US yields relative to their EU counterparts and driving the greenback higher. I’ve taken a shot at selling after prices broke a rising wedge set from early January, entering at $1.3668 with a stop on a daily close above $1.3758 and an initial target at $1.3489.
My pick: Short US dollar-Aussie at AUD$0.9825 and on sterling-yen from ¥132
Expertise: Fundamental, technical and risk analysis
Average time frame of trades: 1 day to 1 week
Last Friday, there was a sharp move in equities and foreign exchange that hinted at a major risk reversal. We have yet to see conviction on this move; but it sets up opportunity. I still like the breakout implications for an US dollar-Aussie dollar push below AUD$0.9825 (with a 125 point stop and first target); while sterling-yen on its long-term channel from ¥132 (with a ¥125 buffer) is a more “passive” opportunity.