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Forex Analyst Picks & Strategies

Christopher Vecchio RSS Twitter

Currency Strategist
Christopher Vecchio

May 29, 2015 My Picks: Long GBPCAD, Long GBPNZD, Long USD/JPY
Expertise: Global macro and medium-term technicals
Average Time Frame of Trades: A few days to a few weeks

In our last update, we discussed the potential for GBPCAD and GBPNZD to continue to build on their recent gains. While a soft bullish outcome has developed, there still be more gains ahead: monetary policy focus has shifted back to the hawkish outcomes around the globe, including the potential for BoE action closer to the start of 2016; and shifts in interest rate differentials have deteriorated the appeal of carry trade opportunities. GBPCAD and GBPNZD both fit this profile for longer-term appreciation.

While the hooplah around the GBP-crosses has notably cooled since the immediate post-election fervor, attention in recent weeks has been justifiably concentrated on the ongoing US Dollar rebound. As traders temper their dovish expectations for the Federal Reserve, the rally may only be getting started. The market remains fairly bearish on the prospect of a rate hike in 2015: the fed funds contract implied probability continues to suggest the first move from the Fed coming in January 2016. Similarly, Q2'15 GDP models - most notably, the Atlanta Fed's GDPNow - are still showing sub-1% growth in the quarter.

As US economic data continues to improve, there is substantial breathing room for the US Dollar to gain as traders reduce their bearish bets and instead take up trades based on rate hike expectations being dragged forward. While pairs with narrow interest rate differentials have been the first to move - notably USDCAD and USDJPY. The prospect of an ongoing USDJPY rally is enhanced by the slack in positioning: traders are the least short the Japanese Yen since Q4'12.

Read more: Trade Setups in USD-pairs Around Q1’15 GDP Revision

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David Song RSS Twitter

Currency Analyst
David Song

May 29, 2015 My Picks: Pending Short EUR/GBP
Expertise: Fundamental and Technical
Average Time Frame of Trades: 1 - 10 Days

EUR/GBP extended the rebound from 0.7054 going into the end of May, but the pair remains at risk of facing increased volatility in the week ahead as Greece faces another IMF payment, while the European Central Bank (ECB) and the Bank of England (BoE) are scheduled to announces their interest rate decisions for June.

Market participants may show a limited reaction to the BoE should the central bank refrain from releasing a fresh policy statement, and the key developments coming out of the euro-area may heavily impact EUR/GBP as the ECB pledges to carry out its quantitative easing program until at least September 2016. Even though the Governing Council is widely expected to stick to its current course, President Mario Draghi may continue to highlight a dovish outlook for monetary policy amid the fragile recovery.

With that said, we will keep a close eye on the monthly opening range for EUR/GBP and the key developments coming out in the days ahead may reinforce the long-term bearish outlook for the euro-pound amid the ongoing deviation in the policy outlook.

For a Greater Discussion on the Trade Setup, Join DailyFX on Demand!

Follow me on Twitter at @DavidJSong.

Michael Boutros RSS Twitter

Currency Strategist
Michael Boutros

May 28, 2015 My Picks: Scalping USDJPY & AUDUSD
Expertise: Technical
Average Time Frame of Trades: 1-2 days

The USDJPY breakout has run into initial resistance around the 2007 highs. A near-term structure is in play off last week's lows and we'll continue to track it for guidance heading into the start of June trade with a break below risking a near-term pullback in the pair.

For the latest scalp targets, review today's Scalp Report

AUDUSD has broken below the 7680 support level noted yesterday keeping the short play in focus. On the sidelines here heading into the month-end though as daily momentum holds 40-support & month end flows come into effect.

For the latest intradya levels, review yesterday's AUDUSD setup.

David Rodriguez RSS Twitter

Quantitative Strategist
David Rodriguez

May 27, 2015 My Picks: Getting long the USDJPY into strength
Expertise: System trading
Average Time Frame of Trades: 2-10 weeks

The USDJPY has finally broken out of its 6-month consolidation pattern, and past experience leads me to believe it will likely continue higher. The only thing that matters in trading is of course price and time, and timing is often a bit tricky with the Yen.

I would like to buy as long as the pair remains above congestion at ¥122 with initial targets at multi-decade highs of ¥124 and ¥125.70. A minimum of 1:1 reward/risk on the trade implies that the entry becomes valid at ¥123 and ¥123.85 for each of these respective targets. Only a daily close below ¥122 would negate my near-term bullish bias.

Kristian Kerr RSS Twitter

Sr. Currency Strategist
Kristian Kerr

May 26, 2015 My Picks: Buy USD/JPY on weakness
Expertise: Technicals
Average Time Frame of Trades: Several days to several weeks

USD/JPY overcame the 78.6% retracement of the 2002-2011 decline near 122.40 this morning to touch its highest level in almost eight years. The clear pattern in the exchange rate since 2011 has been to consolidate for months at a time around long-term Fibonacci levels before making its way higher again. Given this latest push higher is coming on the heels of six months of consolidation one has to wonder if this is the start of another impulsive move to the upside. A weekly/monthly close above 122.40 (and ideally above the 2007 high of 124.13) would further confirm the breakout and set the stage for a push towards the next long-term Fibonacci level around 128.35. Only aggressive weakness back under 120.55 would call into question the positive view

John Kicklighter RSS Twitter

Chief Currency Strategist
John Kicklighter

April 22, 2015 My Picks: Short: USDJPY; Pending: GBPUSD, GBPNZD, EURAUD
Expertise: Fundamentals and Technicals
Average Time Frame of Trades: 1 Week - 3 Months

There are two general themes that are building pressure: a dollar and risk correction. Both are in strong, persistent trends; but each move faces a threat of retreat. For the USD, the risk is more imminent but the corrective move is more likely to be temporary in nature - returning to the dominant trend more readily. For risk, years of speculative build presents are far more concerning situation; but the ultimate turn is more difficult to muster.

Whether a Dollar or Risk pullback, the USDJPY is well positioned - it would be a strong fundamental wind to see both occur at the same time. Marking traction is proving difficult, the next key level for progress is a break below 118.

In a Dollar pullback scenario, there is perhaps speculative access on many of the majors; but the GBPUSD carries the best profile to leverage a pullback. A move above 1.5000 when other Dollar pairs make breaks is my preferred view.

For a revival of the Dollar's strength, there are many prominent trends to choose from, but my view would be that follow through would be difficult to maintain without a correction of the Fed hastening the countdown to a hike, so I view NZDUSD breaking 0.7600 for a short-term outlook as better suited.

Outside of the majors and risk, GBPNZD is in a much larger inverse head-and-shoulders position. A break above 1.9550 would open the door to moving back within a much larger range (to the neckline).

EURAUD is another bigger picture technical setup with a unique play on fundamentals. If the Euro enters another general slump, I would look for a break below 1.3700 as a cue for a long-term trendline support on a 'rough' head and shoulders pattern.

For more details on these and other setups that interest me, visit me for on DailyFX on Demand when I cover the markets.

Ilya Spivak RSS Twitter

Currency Strategist
Ilya Spivak

September 18, 2014 My Picks: Long USD vs. EUR, CHF, AUD
Expertise: Global macro
Average Time Frame of Trades: 1 week - 6 months

I remain long the US Dollar against the Aussie, the Euro and the Swiss Franc as the ECB TLTRO launch and the Scotland Independence Referendum loom ahead.

I sold AUDUSD at 0.9186 and have since taken profit on half of the exposure, with the rest open to capture further downside momentum and a stop-loss adjusted to breakeven (0.9186).

On EURUSD, I sold the pair at 1.3644 in line with my long-term fundamental outlook and likewise took profit on half of the trade. The rest is active with a stop-loss at 1.3583, my initial objective.

Finally, I entered long USDCHF at 0.9068. Here too, profits on half of the exposure have been booked, leaving the rest in play with a stop-loss at the first target of 0.9114.

To receive the latest trade updates, sign up for Ilya's email list.

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Currency Central Bank Rate
Symbol Roll S Roll B
EUR/USD 0.07 -0.16
USD/JPY -0.08 0.02
GBP/USD -0.17 0.08
USD/CHF -0.41 0.18
EUR/CHF -0.24 0.1
AUD/USD -0.54 0.26
USD/CAD 0.12 -0.29
NZD/USD -0.96 0.44
EUR/GBP 0.15 -0.33
EUR/JPY 0.02 -0.07
GBP/JPY -0.29 0.12
CHF/JPY 0.14 -0.36
Rates shown are the expected rolls in USD for holding one 10k lot today on a typical FXCM Standard account.