UBS short term forecasts and trade ideas

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FUBSrom UBS Bank:

USD/CAD Forecast:

From a risk/reward point of view, it makes sense to take a short-term punt here against that level, selling at 1.4170/1.4200, with a stop above 1.4225, targeting a short-term correction towards 1.4050.

GBP/USD Forecast:

Cable continues to tumble. After dropping to a low of 1.4507 into the close on Friday, the pair broke 1.4500 and dipped to a low of 1.4491 in Asia today before reversing. The 2010 low of 1.4228 is now in sight. Sell rallies towards 1.4600, targeting 1.4450. UK industrial production data is due tomorrow and the BoE’s rate decision is due on Thursday.

EUR/USD Forecast:

Eur/Usd broke the recent high during trading in Asia today to touch 1.0970, before reversing. We have seen some selling on the open in Europe and the pair has already moved 30 pips lower. We prefer to fight last week’s move, looking for a chance to sell close to 1.0950, with a stop above 1.1000. We expect buying interest below 1.0850.

NZD/USD Forecast:

Nzd/Usd is down by about 5% since the start of the year, but still trading well above last year’s low of 0.6250. The main drivers of price action will continue to be China and risk sentiment. We expect the pair to remain volatile. Short positioning is unlikely to be stretched and there is no point in trying to fight the current trend, but there is clearly a risk for a short-term correction. Look to fade rallies between 0.6580 and 0.6630, with a stop above 0.6725.

AUD/USD Forecast:

AUD USD continues to trade heavy. The pair was slow to react after US payrolls but eventually came under pressure as the market started to price the divergence between Asia and the US. Employment data is due on Thursday, but price action will continue to be driven by developments in China. As the pair approaches last year’s low of 69.04, a break could open for 0.6770.



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