My pick: Short Aussie-dollar; short euro-dollar; long Aussie-Kiwi
Expertise: Fundamental analysis with risk management
Average time frame of trades: 1 day to 1 week
We are in a week where chop, volatility and fundamental uncertainty will dominate. Given the combined influence of the US deficit impasse and EU sovereign troubles, it will be very difficult to generate meaningful swings. For the risk adverse, these are markets to stay flat in. For the patient, we can wait until Aussie dollar-dollar finally breaks $1.0400 or euro-dollar $1.3950. To avoid it altogether, Aussie dollar-New Zealand dollar could spark a reversal above NZ$1.2625.
My pick: Short euro-dollar (pending)
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
Euro-dollar has been well supported after last week’s EU leaders’ summit produced unexpectedly bold results, while the dollar has suffered amid the continuing deadlock in US deficit-reduction negotiations. However, longer-term EU officials’ commitment to pay whatever it takes for regional stability will hurt growth, while issues in the US appear more transitory. A bearish descending triangle on the weekly chart reinforces this position. I will look to short on a break below the $1.40 figure, targeting $1.33 and $1.29.
My pick: Buy dollar-Swissie SFr0.8000 for SFr0.9000; stop SFr0.7800
Expertise: Technical analysis
Average time frame of trades: 4 weeks
We rarely see markets that show technical studies overextended to this extent, and although this means that the trend is intensely bearish, it also means that we could soon be on the verge of a major corrective reversal with tremendous upside potential ahead. The daily, weekly and monthly RSIs are all oversold, and this in conjunction with a test of critical psychological support at SFr0.8000 should make for an ideal profit target for existing shorts who will surely be looking to exit.