My pick: Short Aussie dollar-Canadian dollar (Ca$0.9700); long euro-yen
Expertise: Fundamental and Technical Analysis with Risk Management
Average time frame of trades: 1 day to 1 week
The fallout from the worst Japanese earthquake in history certainly had its impact on risk trends through volatility, but follow through on positioning rebalancing has shown far less consistency. For now, I will keep an eye on the momentum for this Australian dollar-Canadian dollar rebound, as this pair has less direct risk-bearing. Interesting now is the potential for a long-term euro-yen reversal above ¥116 (stop and first target 175 pips) depending on how the EU settles.
My pick: Remain short on New Zealand dollar-dollar
Expertise: Global Macro
Average time frame of trades: 1 week to 6 months
I sold New Zealand dollar-dollar on 28 February at $0.7516, as prices took out rising trend line support established from the lows in June 2010. Prices are pushing through the top of a falling channel set from early February, but only a daily close above $0.7455 would negate the near-term bearish bias, prompting me to close the trade. Otherwise, I am expecting a disappointing New Zealand GDP result on Wednesday to rekindle selling pressure, clearing the way for a move back lower toward my revised soft target at $0.7173.
My pick: Short Australian dollar-dollar at $1.0035
Expertise: Technical Analysis
Average time frame of trades: 1 week to 6 weeks
The market has been in the process of recovering since breaking below critical support at $0.9800 a few days back, with the latest rally resulting in a push back above parity. Nevertheless, we view the current bounce as corrective, and expect to see the market very well capped from here below $1.0150 on a daily close basis. Ultimately, only a break and close back above $1.0200 would negate outlook and give reason for pause. Short at $1.0035 for a $0.9535 objective; stop at $1.0265.