Forex Strategy: Stay Short EUR/SEK and AUD/CAD
I sold EURSEK at 8.7315 after prices completed a bearish Evening Star candlestick pattern at channel and 61.8% Fibonacci retracement resistance. I am expecting Risksbank to switch to a neutral policy stance after December’s rate cut while the ECB begins easing in 2013 as falling “PIIGS” bond yields mark normalization of monetary policy transmission. Prices have staged a shallow rebound and I'll look for a retest of channel support-turned-resistance at 8.6226 to add to the position. My near-term objective is 8.4994.
I have also entered short AUDCAD at 1.0340 after prices bounced to retest channel support-turned-resistance, looking to trade the narrowing of the yield differential between the two currencies as the RBA continues to ease while the BOC remains on hold in the months ahead. I am initially targeting 1.0260, with a stop-loss to be a triggered on a daily close above 1.0420.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.