As we step into the week of April 28, 2025, the forex market is wrapped tightly in a risk-off environment. Investors are moving away from riskier assets, preferring the safety of traditional havens like the U.S. dollar, the Japanese yen, and the Swiss franc.
This sentiment creates both clear opportunities and potential pitfalls for traders.
This week, special attention is on pairs such as EUR/USD, USD/JPY, USD/CHF, EUR/GBP, and GBP/USD — where both fundamentals and smart money positioning hint at significant moves.
Let’s break it all down so you can navigate the market with clarity and confidence.
1. Understanding the Current Risk Sentiment: “Risk-Off” Mood
Risk-off sentiment means that traders are cautious. When uncertainty rises — whether due to economic data, geopolitics, or central bank decisions — the appetite for riskier assets falls. As a result:
- Safe-haven currencies like USD, JPY, and CHF strengthen.
- Riskier or commodity-linked currencies like AUD, NZD, and sometimes GBP weaken.
This broad shift sets the stage for where money is likely to flow this week, and it directly influences which forex pairs are likely to trend more cleanly.
2. Key Pairs to Trade This Week
Based on the dominant risk-off sentiment and underlying fundamentals, the pairs most aligned for trading this week are:
- EUR/USD — Short bias
- USD/JPY — Long bias
- USD/CHF — Long bias
- EUR/GBP — Short bias
- GBP/USD — Short bias
These pairs offer the strongest combination of fundamental, sentiment, and positioning setups.
3. Deep Dive: Fundamental Bias Breakdown
Let’s dig into each key pair and related markets for a complete picture:
3.1 EUR/USD – Short Bias
The euro faces heavy headwinds as European growth prospects dim while the U.S. economy remains relatively resilient. The COT report also signals a bearish reversal for EUR/USD, suggesting institutional traders are increasingly positioning for more downside. In a risk-off environment, the dollar naturally outperforms, making this pair one of the clearest short setups of the week.
Summary: Fundamentals + COT + Risk sentiment = Strong short bias.
3.2 AUD/USD – Short Bias
The Australian dollar typically suffers in risk-off conditions, and this week is no exception. While the COT report shows a balanced market, the macro landscape clearly weighs against the AUD. Weak commodity prices and fading Chinese demand further pressure the Aussie. Short opportunities here align well with broader market flows.
Summary: Fundamentals support a short, even if COT positioning is neutral.
3.3 GBP/USD – Short Bias
The pound struggles in a risk-off environment, and this week brings no major catalysts to change that narrative. Although the COT report shows a balanced positioning, the underlying macro dynamics favor the dollar. Brexit uncertainties lingering in the background only add another layer of vulnerability to GBP.
Summary: Favor shorts, but manage size carefully due to balanced COT.
3.4 EUR/JPY – Neutral Bias
This pair presents a complex picture: while the euro is weak, the yen gains strength from risk aversion. Adding to the confusion, the COT report reveals a bullish reversal for EUR/JPY. This hints at potential upside correction despite fundamentals pulling in different directions.
Given these mixed signals, caution is warranted — better opportunities exist elsewhere this week.
Summary: Stay neutral; seek clearer setups.
3.5 EUR/GBP – Short Bias
While the euro weakens fundamentally, the pound holds relatively better under global stress. However, the COT report signals a bullish continuation in EUR/GBP, suggesting smart money expects EUR resilience.
This creates a conflict: fundamentals say short, but COT positioning says otherwise. Traders should be cautious and perhaps reduce trade size or wait for price confirmation before entering.
Summary: Short bias remains, but approach carefully.
3.6 USD/JPY – Long Bias
This pair is set to shine. The U.S. dollar’s strength, coupled with a weaker yen despite the risk-off backdrop, gives USD/JPY a clear long bias. The COT report further confirms this setup with a bullish reversal — indicating strong institutional buying. This makes USD/JPY one of the highest conviction trades for the week.
Summary: Strong long setup; high-probability trade candidate.
3.7 USD/CHF – Long Bias
Both the USD and CHF are safe havens — but in this cycle, the USD is dominating. Although the COT report shows a balanced market, fundamentals and sentiment favor slight USD outperformance.
Expect a grind higher rather than explosive moves here, making this pair better suited for patient traders.
Summary: Long bias, but expect slower movement compared to USD/JPY.
3.8 USD/CAD – Long Bias
Oil prices, a key driver for CAD, are likely to remain under pressure with risk-off flows dominating. Meanwhile, the COT report reveals a bullish reversal for USD/CAD — further validating the long bias.
A strong USD combined with a weakening CAD creates a favorable backdrop for upside continuation.
Summary: Solid long opportunity, especially if oil weakens further.
3.9 GBP/AUD – Short Bias
Although AUD is generally weak in a risk-off environment, GBP is not much stronger. The COT report shows a balanced market, suggesting no strong momentum from smart money.
Thus, while a short bias exists, expect choppier price action and less directional clarity compared to other pairs.
Summary: Short bias, but lower conviction trade.
3.10 AUD/JPY – Long Bias
Despite AUD’s fundamental weakness, the COT report shows a bullish reversal for AUD/JPY. This suggests that large players are positioning for a risk-on reversal or that the AUD’s previous weakness has been overdone.
In a pure risk-off environment, this pair could be tricky — so any longs should be approached with caution and quick exits if sentiment worsens.
Summary: Surprising long bias; monitor risk sentiment closely.
4. COT Report Highlights: What Smart Money Is Signaling
Here’s a quick breakdown of major COT shifts:
- Bearish Reversals:
- EUR/USD — Institutions turning increasingly bearish.
- Bullish Reversals:
- USD/JPY — Strong smart money buying.
- USD/CAD — Bullish bets picking up.
- AUD/JPY — Sharp shift in sentiment.
- Balanced Markets:
- AUD/USD, GBP/USD, USD/CHF, GBP/AUD — Potential for chop; fundamentals drive the edge.
- Bullish Continuations:
- EUR/GBP, EUR/JPY — Euro showing relative strength vs JPY and GBP despite fundamentals.
Key Takeaway:
When COT aligns with fundamentals (like USD/JPY long), it’s a high-probability setup. When it conflicts (like EUR/GBP), caution is needed.
Conclusion: This Week’s Strategic Trading Playbook
This week is about navigating a fragile, risk-off market with precision.
Here’s the game plan:
- Focus heavily on pairs with the strongest alignment between fundamentals, sentiment, and smart money — namely short EUR/USD and long USD/JPY.
- Exercise caution where COT reports and fundamentals conflict, like in EUR/GBP.
- Manage risk carefully; volatility can spike unpredictably in risk-off environments.
- Above all: be selective, patient, and disciplined — this is a sniper’s market, not a machine gunner’s.
Good luck this week — trade smart, not hard!