Trading Video: EURUSD or GBPJPY - Which is the Better Risk Correction Setup

By DailyFx | June 09, 2014 AAA

DailyFX.com -

Talking Points:

• Though the S&P 500's bull run is still in place, the momentum through the end of last week fizzled out

• A correction - not reversal - is a high probability scenario and many FX pairs are exposed

• On the monetary policy front, GBPUSD and GBPJPY are wading into potential breakout territory

What kind of Trading best suits you? Technical or Fundamental? Short-term or Long-term? Take our Trader Survey and find out.

The euphoric bid on risk trends through the end of last week following ECB stimulus push and NFP beat flat-lined to start the week. While the S&P 500 - the model for speculative appetite - is clinging on to record highs, the lack of big-ticket fundamental catalysts and lack of risk premium to fade suggests a correction is a high probability. A pullback in an excessive risk lean does not readily translate into a full-scale risk aversion move, but there is still significant trade potential to such a move. Fitting the context of more range bound circumstances in financial markets, pairs like GBPUSD, GBPJPY, AUDUSD and USDJPY are well positioned. Should the intensity pick up, EURUSD could make an effort to clear 1.3550. If risk aversion truly kicks in, we will be awash in opportunity. We look at the more likely scenarios first and work our way out in today's Trading Video.

Sign up for John’s email distribution list, here.

comments powered by Disqus
Related Forex Analysis
  1. Weekly Trading Forecast: FX Traders Prepare for Heavy Volatility on FOMC, GDP and ...
    Forex News

    Weekly Trading Forecast: FX Traders Prepare for Heavy Volatility on FOMC, GDP and ...

  2. Dollar and Market Confidence Ride on FOMC Decision
    Forex News

    Dollar and Market Confidence Ride on FOMC Decision

  3. Gold Losses to Accelerate on Less Dovish FOMC- Support Break Eyes 1206
    Forex News

    Gold Losses to Accelerate on Less Dovish FOMC- Support Break Eyes 1206

  4. AUD Faces A Potential “Breakout” On US Heavy Event Risk
    Forex News

    AUD Faces A Potential “Breakout” On US Heavy Event Risk

  5. New Zealand Dollar at Risk on Dovish RBNZ, Status-Quo FOMC
    Forex News

    New Zealand Dollar at Risk on Dovish RBNZ, Status-Quo FOMC

Trading Center