USD Waterfall – We All Knew This Was Coming

At this point, having taken a lump er two holding a couple of USD longs, it’s an easy “stop and reverse” for a decent trade in the opposite direction.

We’re pretty much looking at the long anticipated “USD waterfall” here as of yesterday, and you’d not want to get stuck on the wrong side of that.

Pure play – a simple long both GBP/USD as well EUR/USD.

Otherwise, some great comments and ideas on AUD here overnight ( thank you everyone who’s contributed ).

As counter intuitive as it may seem I’m easy holding / adding short AUD while holding these two “new trades” for a shorter term rip. It doesn’t “appear” AUD has got much life left in her anyway.

USD looking to take out lows from October….and then some. Easiest play – long EUR and GBP.

 

The USD Waterfall: Playing the Reversal Like a Pro

When markets hand you a clear reversal signal, you take it. No hesitation, no second-guessing. The USD waterfall we’re witnessing isn’t some mystical market event — it’s pure momentum shift, and the smart money is already positioned. While retail traders are still scratching their heads about yesterday’s dollar strength, professionals are loading up on EUR/USD and GBP/USD longs like it’s Christmas morning.

This is exactly what separates winners from losers in forex. The ability to recognize when your thesis is wrong, cut losses fast, and immediately pivot to profit from the new reality. That “stop and reverse” mentality isn’t just trading jargon — it’s survival instinct in a market that punishes stubborn positions without mercy.

EUR/USD: The Clear Leader in This Rally

EUR/USD is showing the most conviction in this USD decline, and for good reason. European economic data has been quietly improving while US indicators start showing cracks. The euro’s been coiled like a spring for weeks, and now we’re seeing that energy release in spectacular fashion.

Technical levels are lining up perfectly for continuation higher. The pair just broke through key resistance that’s been holding it down for months. Every pullback is getting bought aggressively, which tells you institutional money is flowing in heavy. This isn’t some retail-driven squeeze — this is real money making real moves.

Target levels are clear: first stop around 1.0650, then we’re looking at 1.0750 before any meaningful resistance shows up. But honestly, if USD weakness continues at this pace, those targets might get hit faster than most expect.

GBP/USD: Riding the Pound’s Momentum

Cable’s been the surprise performer in this move, and that’s saying something. The pound’s had its share of drama over the past year, but when it decides to run, it runs hard. We’re seeing that classic GBP volatility working in our favor now, with each daily candle closing near the highs.

The beauty of trading GBP/USD right now is the clear trend structure. Higher lows, higher highs, and volume supporting every move up. The Brexit uncertainty that haunted this pair for years is finally in the rearview mirror, and traders are remembering why they used to love cable.

Risk management is still key here — the pound can reverse just as violently as it rallies. But as long as we’re holding above 1.2580, this uptrend stays intact. Next major level to watch is 1.2750, where we might see some profit-taking before the next leg higher.

The AUD Paradox: Why Shorting Makes Perfect Sense

Here’s where it gets interesting — holding short AUD positions while going long EUR and GBP might seem contradictory, but it’s actually brilliant risk management. The Aussie’s been living on borrowed time, propped up by commodities that are starting to roll over.

China’s economic slowdown is finally hitting Australian exports where it hurts. Iron ore prices are softening, and the RBA’s dovish pivot is becoming more obvious by the week. While EUR and GBP are benefiting from broad USD weakness, AUD is fighting its own fundamental headwinds.

This creates a perfect hedge scenario. If the USD waterfall continues, our EUR and GBP longs print money. If we get a surprise USD bounce, AUD likely gets hit hardest among the majors, protecting our portfolio. It’s not about picking sides — it’s about playing probabilities and managing risk across multiple scenarios.

October Lows: The Next Major Target

The technical picture couldn’t be clearer — USD is heading straight for those October lows, and probably beyond. When major support levels break with this kind of momentum, the follow-through is usually swift and merciless. This isn’t some gradual drift lower; this is liquidation-driven selling that feeds on itself.

Smart traders are already positioning for the move below October’s USD lows. Once that level gives way, we’re looking at a vacuum zone down to levels most analysts aren’t even discussing yet. The rally setup in risk assets makes perfect sense in this context — weaker dollar means higher everything else.

Bottom line: this USD waterfall is just getting started. EUR and GBP longs are the cleanest plays, AUD shorts provide the perfect hedge, and October lows are coming fast. Trade accordingly.