I've been looking for AUDUSD long opportunities and most recently EURUSD short positions. So why not combine the two?

I like a EURAUD short against the highs at 1.2428. A minimum 1:1 Risk/Reward means that my first target will need to be the next low at 1.2228. But realistically I'm targeting fresh lows.

Why? 'Risk' is on as the S&P 500 Rallies and the S&P's Volatility Index (VIX) trades near pre-Lehman lows. The strongly negative correlation between the VIX and AUDUSD points to further Aussie upside.

All the while, I think there's real risk that the EURUSD set an important short-term top. Why not go through the individual pairs? For one, being efficient with available margin in my own trading account. The other--I like the downtrend in the EURAUD.

--- Written by David Rodríguez, Quantitative Strategist for DailyFX.com

To receive this author's reports via e-mail, contact drodriguez@dailyfx.com with subject line "Distribution List".