European Concerns are Starting to Fade

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Third quarter GDP was revised down very slightly in the US and the UK today but traders seemed relatively calm before the existing home sales numbers are released this morning. Expectations for home sales are high but not unreasonable so we don't expect to see a lot of volatility as the Wednesday session heats up. Inside the forex, despite warnings of a downgrade on Portuguese debt, the majors are relatively stable. The trends in favor of safe-haven currencies are still in play with some room to run but we may be seeing some reduction in the current levels of investor fear that have been driving the Euro so low. In the video I will walk through a few of these trades and why we are favoring the crosses over some of the majors right now.

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Across the board, the dollar is beginning to show some cracks in its recent trend. Yields are not likely to fall farther and risk appetite seems to be stable. This could be a great opportunity in the short term for a rally on the EUR/USD or the AUD/USD as traders are willing to take more risk globally. In the video I will go into some detail about why an option position on those two currency pairs may be preferable to an outright long position. An option trade can reduce some of the risk of a whipsaw while still providing plenty of upside potential.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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