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Chris Weston's forex trade ideas

An update on all of Chris Weston's current forex trade ideas.

EUR/USD

I suggested short positions on February 17 at 1.3705 (the level at the time of writing), however price action looks fairly neutral right now and seems to lack a catalyst. Looking at the weekly chart (see below), the pair is still respecting the multi-year downtrend, which is now seen at 1.3830, so I would set stops at 1.3845. On the daily chart, the MACD is above both the zero line as well as the signal line, which is bullish, however momentum is wanning. Also after a series of lower highs on the nine-day RSI of late, we saw a higher high last week, again mitigating a downside reversal.

Trend conditions are showing a very neutral picture right now and a lot of that is down to poor data out of the US, which is holding money managers back from going overweight the USD. Longer-term I still like short EUR/USD trades, but it is clear that while the key fundamental drivers for a strong USD are not prevalent right now, so the downside seems limited.

I will stay short here, but from a pure opportunity cost perspective there seems better opportunities and EUR bears will want to see a move through 1.3680 for downside momentum.

EUR/GBP

Fundamentally some of the emphasis has come out of sterling, given comments from the Bank of England of late that they are in no rush to hike interest rates. Looking at the money markets, (short sterling futures) the March 2015 contract is now pricing in 93 basis points, which is still fairly elevated, however expectations have been priced out of the market lately. I suggested looking at short positions on February 14 at 0.8240; however the pair has failed to push through the 61.8% retracement of the 2012 to 2013 rally at 0.8160, so I would like to see this level give way.

I will stay short on this pair, with the MACD firmly below zero on the weekly and daily chart. On the daily chart downtrend resistance drawn from the October 29 high comes in at 0.8300, so I would put my stop loss at 0.8312. I will continue to update this trade, but like EUR/USD, there seem better opportunities in the market.

AUD/NZD

I suggested buying AUD/NZD around 1.0600 on January 30, however while my rational behind the trade was sound (with the pair stagging a strong rally), my limit was too aggressive and the pair found a low at 1.0641. I have cancelled the trade, however I will look to go long on a daily close (09:00 AEDT) above 1.0960, which is the neckline of the reverse head and shoulders pattern. A break here would target the 1.1400 level. I will look at long positions on this development. 

USD/SGD

I suggested short trades here this week as my ‘one to watch’ at 1.2680, so the trade is around 50 pips in the money. I will continue to update this trade through the week.

EUR/USD

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