Short EURAUD Against the High
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
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