Iââ,¬â"¢m offering EUR/USD at an average price of 1.2585 in three pieces for a 1.2600 figure test, as described below, with stops above 1.2610. Also, USD/JPY is showing some Fibonacci confluence resistance at 119.50. This level could be sold for a nice short-term trade back down to 119.20, which hedges our developing EUR/USD short. Being short USD/JPY as we are working into our EUR/USD short hedges a weakening dollar as we are triggered into the first two pieces of the bigger time frame EUR/USD short. Lastly, being short USD/JPY and EUR/JPY at the same time makes you synthetically short EUR/JPY, which has been struggling with the 150.00 level among the flurry of recent talking regarding the strengthening Japanese economy.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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