My pick: Short euro-dollar and Aussie dollar-dollar; long euro-kiwi dollar
Expertise: Fundamental and Technical Analysis with Risk Management
Average time frame of trades: 1 day to 1 week
My long euro-yen position served me well, but I decided to book the second half of the position before the ECB’s decision, for a good overall return. Neither my euro-dollar (below $1.42) nor Australian dollar-dollar ($1.020) short setups have triggered yet, but should risk aversion pick up pace, they will. I like sterling-dollar for similar reasons, but that needs to be played by momentum. Less risk dependent is a possible euro-New Zealand dollar long above NZ$1.8550.
My pick: Long dollar-yen (pending)
Expertise: Global Macro
Average time frame of trades: 1 week to 6 months
Two weeks ago, dollar-yen finally broke out of the congestion that contained prices in the six months since October, rising to retest familiar resistance just above the ¥85.00 figure. A pullback is now underway and I will look for signs of its exhaustion to enter long to capture the long-term advance. Expect a forthcoming rise in US Treasury yields, as the Federal Reserve gets closer to ending QE2. As the US Treasury moves to finance the budget deficit, bond prices lower with new issuance while pressuring yields higher.
My pick: Short euro-dollar at $1.4405
Expertise: Technical Analysis
Average time frame of trades: 1 week to 6 weeks
The latest topside failure ahead of psychological barriers at $1.4500 and subsequent bearish close on Monday could warn off the onset of a sizeable short-term corrective pullback. The major rising trend-line off the 2011 lows comes in by the $1.4250 area and we would expect to see a test of this level over the coming sessions. From there it will be interesting to see if the market can actually put in a daily close below the trend-line which it has been unable to do all year. Stop at $1.4525.