Short Euros And Long Pounds A Consistency Across DailyFX Analyst Picks

With volatility picking up for the US dollar and carry trade, the momentum behind the euro and pound seems to be modest in comparison. With technicals being pushed and fundamentals in flux, there are a number of different setups euro and pound setups out there. However, there seems to be one consistency across most of the Analysts: short euros and long pounds. See how each person is positioning below:

Chief Strategist - Antonio Sousa

My picks: Short EUR/USD
Expertise: Fundamentals, Volatility and Sentiment
Average Time Frame of Trades: 1 day - 3 months

I remain short EUR/USD since the 1.47 and I expect the euro to fall further once the ECB comes under pressure to cut interest rates. Recent economic data points towards a weakening of real GDP growth in the euro zone economy and the ECB will have no other choice than to cut rates faster that traders had previously expected. Lower interest rate differentials could make the euro less attractive to carry traders and the lower level of demand for bonds and stocks denominated in euros could accelerate the losses in the EUR/USD.

Senior Currency Strategist - Jamie Saettele

My picks: GBPUSD long (limit buy at 1.7710), against 1.7440, target 1.88
Expertise: Technical
Average Time Frame of Trades: 1 month

The GBPUSD is headed higher in what may be a B wave within either a flat or triangle that is underway from 2.1160. As such, we are expecting a large portion of the decline from 2.1160 to be retraced. Resistance on the daily is not until 1.88. Similar to the EURUSD, the next few days could be choppy as a small correction plays out. Support is at 1.77.

Currency Strategist - John Kicklighter

My picks: Short EURCAD
Expertise: Combining Money Management with Fundamental and Technical Analysis
Average Time Frame of Trades: 3 days - 1 week

Up until a few weeks ago, the euro and pound crosses were the most volatile currencies in the FX market. Today, both have grown to be relatively stable in comparison to the US dollar and carry trade. Looking across the possible crosses, a lot of the potential setups are already nixed for me. The event risk centered on the dollar - the banking crisis and afternoon FOMC rate decision - precludes using the majors. Also, the potential collapse of the world's finacial system keeps us from carry trade sensitive pairs that involve the Australian dollar, New Zealand dollar, Japanese yen and Swiss franc. For those few remaining pairs, we apply fundamental and technical filters and come up with short EURCAD.

Technically, the pair is in a downward sloping trend channel and has just recently tested the top in this formation. What's more, a build up of resistance is seen around 1.5275/300 where a former support level, 20-day SMA and short-term 50% fib stand. Fundamentally, both currencies are looking at similar rate forecasts (about 75 basis points of easing over the coming 12 months); but the Canadian economy seems to be better buffered to the evolving economic shock. With Germany contracting through the second quarter and policy officials forecasting further declines, a recession for the Euro-Zone seems very probable. For Canada, a permanent trade partner, strong domestic economy and commodity exports will act as a parachute. For a position, a short that is established near resistance can have relatively conservative stop placement and look for significant targets. A first target should equal the risk taken, while a second objective could target the September 11th swing low conservatively or even 1.48 to 1.45 in an aggressive move.

Currency Strategist - Terri Belkas

My picks: Long EUR/USD
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 1 - 3 Days

I'm sticking with my pick from yesterday: long EUR/USD to target 1.4450. Yesterday we saw the pair test the 61.8% fib of 1.3880 - 1.4451 at 1.4100 and intraday trendline support (former resistance) at 1.4125. While trading the US dollar right now is extremely risky given market speculation that the Fed will cut rates this afternoon by 25bps. I don't believe they will reduce rates - which would normally be a bullish result for USD - but also think that the FOMC will signal a more dovish stance on inflation going forward, and that will weigh on the greenback.

Currency Analyst - David Rodriguez

My picks: Bullish GBP/USD-looking for buy opportunities
Expertise: System Trading
Average Time Frame of Trades: 2-10 weeks

I maintain my GBPUSD-bullish stance that I spoke of exactly a week ago, and I would still look to buy dips in the forex pair. As of now, the risk reward may not favor an entry at current levels, but keep a lookout for buy opportunities. Our forex buy/sell trading signals have performed well as of late, and traders should definitely check those out.

Currency Analyst - Ilya Spivak

My picks: Sell EURCAD below 1.5256
Expertise: Macro Fundamentals, Classic Technical Analysis
Average Time Frame of Trades: 1 Week - 6 Months

While EURUSD has seen profound volatility, trading in EURCAD has been a lot more orderly. The pair bounced higher from support at the 1.50 level to find resistance at 1.5256, the 50% Fibonacci retracement of the 12/27/07-03/31/08 rally. Resistance is bolstered by the top of a downward sloping channel that has contained price action since 08/07 and guided the break past major trend line support on 08/14. With the fundamental outlook on the Euro still bearish as index swaps point to 50 basis points in rate cuts over the next 12 months, look to go short targeting another test of the 1.50 hurdle.

Currency Analyst - John Rivera

My picks: Short EURJPY
Expertise: Fundamentals Combined With Technicals
Average Time Frame of Trades: 2-4 Days

Given th eturmoil in the fincial sector the prudent move is to stay with the Yen crosses. Yesterday's USDJPY short was very profitable and if the troubles of AIG worsen then we could see a full blown flight to safety. Target 145.00. I am leary of anything involving the dollar as the FOMC decision is on tap. But the EURUSD failing to move higher is worth a peak for a potential short trade, especially since it failed to break above the 20 Day SMA.

Currency Analyst - David Song

My picks: Short EUR/GBP
Expertise: Fundamentals Combined with Technicals
Average Time Frame of Trades: 2 Days - 2 Weeks

Economic data for the U.K. continues to fall short of expectations, which suggests that the downturn may only get worse. The EURGBP has fallen below 0.8000, and I expect the downward momentum to lead the pair lower over the next two weeks. I have set up a near-term target around 0.7795, but price action may congest near this psychological level given that both the ECB and BOE are expected to cut their respective interest rate over the next 12 months.

DailyFX

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