In my view, the low risk trade remains shorting EURAUD (or EURNZD). Yesterday we had a nice entry point (and +100 in EURNZD!), today it’s not as good.

Regarding EURUSD, my tiny recommendations today:

– Short (Scalp) the EURUSD on rallies in between 1.3070-1.3080 for 10-20 pips profit.
– Buy (Scalp) the EURUSD on sell-offs in 1.2830-1.2815 for 10-20 pips profit.

Analysis: The market remains undecided and volatility continues to contract in EURUSD. These last days the risks to the downside have been accumulating. Greece is starting to become instable again. Spain is showing off its pride. On the other hand, the results of the US elections next week might affect sufficiently sentiment to spark some market movement. Today NFP data might also create wide movements but most likely will only add to an already fuzzy picture (except if data is above 200k or below 50k). From a technical point of view, the EURUSD is stuck within an undecision wedge pattern, and seems likely to test today the bottom of the wedge at 1.2890. A very high risk approach would be to buy into such a sell off for some very short term profits, but we do not recommend this. We would patiently wait for the NFP data to provide us either a retest of the 200-DMA (~1.2830) for a buy entry or a retest of the trend line resistance from the tops in april 2011 and august 2011 for a short entry (~1.3070). Given the uncertainty in the air, we would not keep these positions over the week end and try to collect profits today.

http://www.chifbaw.com/en/wp-content/uploads/2012/11/eurusd021112lo.gif

Good luck.