Sometimes going against the trend can pay off

  • March 21, 2006
  • Dave Floyd

Dave Floyd is a professional FX and stock trader based in Bend, OR and the
President of Aspen Trading Group. Dave’s approach to FX combines technical
and fundamental analysis that results in trades that fall into the swing
trading time frame of several hours to several days. For a free trial to
Dave Floyd’s Daily Forex Alerts


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We are
considering a short in EUR/AUD.  There is both a technical and macro rationale
for this trade:

 

1. 
Bernanke’s speech last night hinted at higher interest rates here in the US –
should be a EUR/USD negative

 

2.  FX
participants have priced in several rate hikes by the ECB on somewhat limited
hard data – have they overdone the interest rate play as a reason to

buy EUR/USD
and the EUR crosses?

 

3.  While
AUD, NZD & GBP will suffer vs. the dollar due to their high deficits and
stagnant rate policies, it is hard to see continued weakness in AUD vs. EUR (i.e
EUR/AUD)

 

The
technical backdrop is not ideal because the prevailing trend is higher,
nonetheless, a short argument can be made as outlined above.

 

 

As always,
feel free to send me your comments and questions.

 



Dave

 

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