There is a range of high-level event risk ahead, and the markets are bracing for impact. Given the probability of meaningful shifts in risk and yield assumptions on an ECB rate decision and Friday US NFPs, many traders will be looking to reduce their risk exposure to the possibility that an unfavorable developement can drive the market against established or high-risk speculative positions.

Up first is the ECB rate decision. The array of expectations for this event are wide. Therefore, there is a high probability of volatility as a good portion of the market is likely not properly positioned for the outcome. I believe that the medium-term outlook (weeks ahead) will see the euro lower, but I am going to protect short-term gains. So, I have booked half of my EURUSD short for 101 pips and trailed the stop on the second half to 1.3665 (+50). If there is a bearish response to the ECB's ultimate decision, I will consider adding to the short on a break below 1.3575.

Three other Euro trades I'm watching are EURAUD, EURGBP and EURJPY. I am still short EURAUD and in the money. For relative policy, ECB accommodation plays well against the RBA's tightening. However, I will still cut this position for a smaller profit if it rebounds. I like EURJPY particularly if there is both a large stimulus move and risk aversion kicks in - watching levels of 139.25 and 138. As for EURGBP, this can cater to the pound's yield advantage on a break below 0.8100 and 0.8075, or spell a prime pair should the Euro be in for a rebound above 0.8150 and 0.8175.

Other trades on my radar are those that haven't been in my top teir for a while. I like AUDUSD should it break 0.9200 on a risk aversion move. Speaking of risk sensitivity, CADJPY is leaning against the top of its wedge formation while NZDJPY is heavy on the floor of a multi-year rising trend channel. CADJPY can play either way - but a range cover on a bearish break would be easier to trace out. Same with NZDJPY holding and rebounding. Bigger trend developments are still difficult to develop.

For my long-term positions, the long USDCHF is still doing well, but it is waiting for the medium-term view for the Euro to gain traction. AUDNZD has finally passed 1.1000 and a big step has been put in for confirming a bigger turn effort.

Expect breakouts? Use the DailyFX Breakout 2 strategy to signal or confirm setups.

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