Euro Cross Pick 07.22.10
Following up with the EUR/JPY short recommendation from earlier this week, the rise in risk aversion subsequent to Fed Chairman Bernanke’s testimony triggered the sell entry at 111.20, but the sharp rebound during the overnight session has moved my position out-of-the-money as price action bounces back from a low of 110.00. However, as the overnight advance appears to have stalled ahead of the 10-Day SMA at 112.18, I will look to maintain the trade heading into the weekend, but the results of the European commercial bank stress test due out tomorrow is likely to spark increased volatility in the exchange rate as investors weigh the prospects for future growth. As a result, a dismal outcome should certainly work in my favor, but an impressive reading for the banking sector could lead the pair to exceed my stop at 112.29.
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