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A spark of volatility sets up trade opportunity across a number of pairs. However, complacency and speculative positioning are strong trends, so I need better confirmation than I would normally look for. Furthermore, the glut of opportunities should be concentrated for those that can work even if the risk move is mild.

Originally, my favorite currency pair for medium-term potential is EURUSD. The divergence in rate bearings and the focus that the ECB is paying it makes for a bearish opportunity for multiple reasons. In general I think most euro pairs are exposed to further losses - see my strategy video on it. For EURUSD, I need a fundamental push; but technically, I'm watching 1.3500.

Another euro pair that is giving my favorite a run for its money is EURJPY. The same euro risk exposure could spur another global risk-off response. If that is the case, this would amplify this overbought cross. I am watching 137.50 as a line in the sand.

Meanwhile, I took my EURAUD short off for a profit this past week (+307) since it has held to congestion. Two months was longer than I expected to hold it. Like EURUSD I like the imbalance of opportunity. I may short again below 1.4350.

While there are plenty of options should a risk off run begin, another pair I am particularly interested in is USDJPY. Watching 101.50, I'll look for a change in the sentiment tide.

Meanwhile, for existing positions, I still have my USDCHF and AUDNZD long positions. These are my top 2014 trades and have been on for some time. There fundamentals are still appealing, so I have no plans to unload them.


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Forex pairs in this Article » EUR/USD, EUR/JPY, EUR/AUD, USD/CHF, USD/JPY

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