My pick: Short euro-dollar, short Australian dollar-dollar, long euro
Expertise: Fundamental and Technical Analysis with Risk Management
Average time frame of trades: 1 day to 1 week
Neither the short euro-dollar nor the short sterling-dollar setups I laid out last week were triggered, as sentiment and rate expectations held up. That said, my euro-yen long provided a quick first target of 175 pips and I am considering 120 as the second objective. Going forward, I still like the potential in a euro-dollar reversal below 140 given the over-inflated rate expectations. Australian dollar-dollar is particularly oversold, but I’ll wait for a move below $1.02.
My pick: Short Australian dollar-dollar at $1.0349
Expertise: Global Macro
Average time frame of trades: 1 week to 6 months
I have entered short Australian dollar-dollar at $1.0349 after the pair produced a bearish Dark Cloud Cover candlestick pattern below resistance at the top of a rising channel that has guided prices higher since October. Negative RSI divergence reinforces the case for a downside scenario. Fundamentally, a flat RBA outlook through the year-end promises to weigh on the Aussie as other central banks begin tightening, narrowing yield spreads. My initial target is $1.0233, with a stop-loss to be activated on a daily close above $1.0416.
My pick: Buy dollar-Canadian dollar at Ca$0.9710
Expertise: Technical Analysis
Average time frame of trades: 1 week to 6 weeks
Any recovery in this market have been short-lived, with the price dropping below Ca$0.9700 to fresh multi-month lows in the Ca$0.9600s. However, we see risks for additional declines from here as limited, with the greater risk for the formation of a longer-term higher low above Ca$0.9055 ahead of the next major upside extension beyond Ca$0.9975 and back above parity. Ultimately, only a daily close below Ca$0.9500 would delay. Buy at Ca$0.9710 for a Ca$.0200 objective, stop at Ca$0.9445.