Choose a currency combination that suits your trading style
Most traders (whether long-term or short-term) adopt a combination strategy. Day traders may believe that the euro price is too low based on fundamental data. But if the trading price of a currency pair is below an important technical support level, traders may not buy. Similarly, carry traders may wish to long the euro against the yen, but in order to avoid the central bank being more hawkish or dovish than expected, they believe it is necessary to wait until after the Bank of Japan meeting before proceeding. Long term traders may want to short the euro because they believe that the US economy will outperform the eurozone economy. Moreover, if they have already taken a heavy position in euro short positions, they may wish to wait for the euro to rise to important technical resistance levels before executing euro short trades.