DailyFX Analysts Snapping Up Some Euros?

Analyst picks for: 2008/07/08

• EUR: Looking to Go Long?
• GBP: Mixed Views on the British Pound

Four out of seven DailyFX Analysts are looking to go long Euros against something. Longer term traders Saettele and Sousa prefer the EUR/USD outright and expect a break of 1.60. Shorter term traders Kicklighter and Spivak like buying EUR/JPY and EUR/GBP respectively.

Rodriguez also likes long EUR/JPY but thinks the risk is too high so he's going for GBP/JPY. Ultra short term traders Lien and Schlossberg like short GBP/USD and short EUR/GBP respectively for some quick moves.

The British pound is in play this week with the trade balance numbers and the BoE rate decision due over the next 48 hours.

	Chief Currency Analyst Kathy Lien	My picks: Short GBP/USD Expertise: Combining Fundamentals with Technicals Average Time Frame of Trades: 1-3 Days
EUR: ECB President Trichet put an end to the Euro party last week and because of that, the 1.58 to 1.53 trading range will probably remain intact for the summer. Traders are still working off their Euro long positions and adjusting for the possibility of more aggressive tightening by the Fed than the ECB. I am bearish Euros (currently 1.5678), looking for a move down to 1.5580. GBP: As for the British pounds, I am still bearish. The GBP/USD has broken below the 100-day SMA. It is headed to 1.9688 (now 1.9736) and if that level breaks, then onto 1.9590. 1.9800 would be my risk.

	Senior Currency Strategist Boris Schlossberg	My picks: Short EURGBP Expertise: Fundamental Average Time Frame of Trades: 12- 24 hours
After being battered relentlessly by series of negative economic news, cable was able to recover most of its losses and bounced back to 1.9800 level before selling off in broad dollar rally in the AM. One piece of news that helped was the better than excepted reading in DCLG House prices which printed at 3.7% versus 3.3% forecast. The report is likely to keep the pressure on the BoE to keep rates steady for the time being and therefore alleviate some of the selling pressure on sterling. On the other hand the euro has been sunbject to the vagaries of equities. Rallying when equities fall and falling when they rise. With Bernanke speech suporting stocks for now I think the pound will outperform the euro for the rest of the day. So short EURGBP is my call for today.

	Technical Currency Analyst Jaime Saettle	My picks: EURUSD Long, stop 1.53, target above 1.6018 (probably upwards of 1.70) Expertise: Technical, Psychology Average Time Frame of Trades: 2 weeks (this one will be longer)
As long as price is above 1.5303, it is probable that a large 5th wave advance is underway. Fibonacci extensions (to estimate the end of wave 5) are at 1.64 and 1.70. In FX, major tops are typically preceeded by a blow-off top that creates a strong sentiment extreme. We have yet to see the kind of psychological extreme that often accompanies significant tops. As such, it is unlikely that the EURUSD bull trend that began at the end of 2005 is complete. The GBPUSD should remain supported but the EURUSD offers the best bang for your buck. Cable is stuck in a sideways consolidation and while it could exceed 2.04, there is as good of a chance that a triangle is underway and that the pair will remain below 2.04.

	Currency Analyst Antonio Sousa	My picks: Long EUR/USD Expertise: Interest Rate Dynamics, Volatility and Sentiment Average Time Frame of Trades: 1 week – 1 Year
Last week, the euro fell sharply on speculation the European Central Bank wouldn’t be raising rates again in 2008. Yet, I think the speculation was overdone and I expect the euro to recover in the week ahead. In fact, a report released last week on the euro zone CPI showed that inflation in Europe rose to the highest in more than 16 years. As a result, I expect the ECB to keep its hawkish tone since inflation has exceeded the 2% price stability limit for the last 10 months. According to interest rate swaps for deposits denominated in euros, the market has already priced in one additional rate hike by the ECB in 2008. While the 3 month LIBOR rate stands at 4.96 percent, the 1 year LIBOR rate is being offered at 5.38 percent. I project the EUR/USD to test and break 1.60 over the next few weeks.

	Currency Analyst David Rodriguez	My picks: GBP/JPY Long Expertise: Quantitative Analysis, System Trading, Trader Sentiment and Positioning Average Time Frame of Trades: 2-10 weeks
At the risk of sounding like a broken record, I see little reason to abandon my short-JPY, long EUR and GBP bias. In terms of short-term trades, I like buying the current dip in the GBP/JPY, but I think that the EURJPY is too high at the moment to make for a reasonable risk/reward play. Given a 4-month uptrend in the GBP/JPY, I maintain my bullish bias and will look to buy tests of support in the 210-210.50 range, placing max risk below previous spike lows at 209.43 and initial profit targets at recent spike-highs of 212.48. The fact that the JPY has remained weak despite clear drops in global equity markets emboldens my bullish stance, and the reasonable hope of a short-term correction in the Dow and other major indices may nonetheless support the JPY crosses.

	Currency Analyst John Kicklighter	My picks: Long EURJPY Expertise: Combining Money Management with Fundamental and Technical Analysis Average Time Frame of Trades: 3 days - 1 week
The economic docket is relatively light this week, but there are a number of specific events that could produce considerable volatility - a difficult situation to incorporate into trades given that a great swath of the market is looking at ranges both big and small. Taking these events into consideration (and the EURGBP breakout trade that I have laid out yesterday and has yet to trigger), the field narrows itself. Among those pairs that have few spikes of significant economic event risk is EURJPY. However, here the health of general risk appetite will be a notable consideration. To minimize risk in risk trends, I'm going to look for a trade to the long side that holds with the dominate trend from March. Recently, congestion has contained price between 169.00/50 and 167; so my entry and initial target will be tailored around these barriers. Considering the relatively small range, I prefer an entry that is close to support at 167.15/40 and will set a limit entry order in that area. My stop will be relatively wide to cover the swing low from June 30th. At the same time, considering the range will hold, there is only 200-250 points to trade within the short-term; so the first target will need to be set equal the risk on the single lot. A second target within the range would be pushing the zone, and the probabilities would be only moderately changed should I put it beyond the range for a potential breakout run (considering the dominate trend is still to the upside). My second target will be set just short of the next large phsycological level at 170; and to reduce risk on this aggressive outlook, my stop on this second lot will be moved to breakeven when the first target is hit.

	Currency Analyst Ilya Spivak	My picks: Long EURGBP Expertise: Macro Fundamentals, Candlestick and Fibonacci Technical Analysis Average Time Frame of Trades: 1 week - 6 months
EURGBP has been consolidating in a Pennant formation since the rally lost steam mid-April. This is a continuation pattern, suggesting a bullish breakout. Look to go long on a daily close above 0.7970. Set stop loss at 0.7854. The initial target aims at April's high at 0.8100.