It´s simple. Very simple.
The EUR and The U.S Dollar are simply the two most widely held currencies on the planet. This being said….you can usually generalize that weakness in one suggests strength in the other ¨regardless¨ of the news. Seriously…….all news aside you can generally just look at EUR and USD as ïnterchangeable¨ – trading nearly 100% correlated. Tit for tat.
So……..with further consideration that USD has now reached a major inflection point ( and is headed decidedly lower ) we can also assume that EUR is set to bottom. Fair assumption?
Now you start looking at EUR pairs specifically and ask yourself……which currencies will I see the largest moves in against EUR?? Well…….we can also assume that commodity related currencies take a hit when risk appetite subsides right? Currencies like AUD and NZD ( Australian and New Zealand ) generally fall when risk appetite wains so……long EUR and short AUD?
I’m watching exotic pairs such as EUR/AUD ( which also falls into my ¨faceripper¨ category, being that this thing is extremely volatile, and ready to blow up in your face at any moment ). You can’t trade this thing…..but you can sit on the sidelines and observe.
I´m watching this pair as of today…..not trading it – YET!
Facerippers are nuts. These currency pairs will clean out your account without a moments notice so please – do not try this at home! Watch this pair……watch for the coorelation to ¨risk on vs risk off¨.