Is the Aussie dollar on the verge of a precipitous fall? Will the British Pound survive or will it be forced to join the Euro? Is there money to be made from the changing fortunes of the major currencies this year?
FXCM, one of the world’s largest Forex dealers, has revealed its top trading ideas for 2011, and here is what they think. Short the AUD
In 2009 the world rushed in to guarantee risky assets, pumping liquidity in the market. Stimulus money was delivered in large quantities to support the failing markets, but in 2010 the markets topped off again and fundamentals began to come into play. Once again stimulus money was pumped into the system to prevent a further crisis in the US and Japan.  Eventually the day of reckoning will come when the governments realise that they are over-extended and the subsequent unwind will happen. 
Among the rank that will be hardest hit are the high-yielding currencies (Australian and New Zealand dollars), the euro which has seen problems with the support of its 750 billion euro rescue fund and the S&P500 which has been inflated by Fed stimulus.  Aussies should buy Euro
Buying the Euro against the Aussie may be a strong trade on the basis that the drivers of the Australian market, that being commodity prices and interest-rate differentials, are fairly exhausted. Plus, the Euro is at a 20 year low against the Aussie.
Looking at the charts, the parabolic move down in the EUR/AUD pair simply cannot be sustained for much longer. Technically this pair has been begging for a pullback for several months now, and is starting to show signs of a bottoming pattern. Euro and Pound Tipped To Fall Against The US Dollar
For the first half of 2011, FXCM are calling short the British pound and the Euro against the United States dollar. They think that the cutbacks in social and economic programs across Europe will see continued economic weakness into 2011. And the UK is not immune either, as austerity measures will continue to slow the recovery there too.
This trend is expected to last for roughly 6 months, and will begin to reverse in the latter half of 2011.
While it is not commonly thought that the British pound will dissolve, many traders have openly speculated that the long-term viability of the Euro could be in trouble. But as the austerity measures slowly reduce the regions’ deficits, it should give a boost to the survivability odds of a common currency in Europe.
Recent moves and statements by the European Central Bank have quelled fears about ongoing European defaults by member nations. The central bank seems willing to do whatever it takes to get Europe back on track. Steps already taken include buying Portuguese and Spanish bonds. 
By the second half of this year, it’s expected that fears over the European debt crisis will have dissipated somewhat.
The US Markets
The S&P 500 has been extremely overbought for several months now, and is due for major correction.
Gold prices should continue to rise, although a strong pullback could be seen before the next leg up.
US Dollar and The Swiss Franc
Two particular currencies that may be in favor this year are the US dollar and the Swiss franc.
Short the Yen against the US Dollar
The Japanese yen may experience weakness against the US dollar driven mostly by the expected higher yields on U.S. Treasury bonds. This particular currency pair tends to have an inverse relationship with US yields. FXCM expects this inverse correlation to continue in 2011.
Of particular note is the recent downgrade of Japanese debt. Because of the downgrade, many financial firms will simply forgo buying JGB’s, or Japanese bonds.
Short the Euro against the British Pound
Short the Euro against the British pound on the basis that the UK economy will outperform Europe as the British interest rates seem likely to head higher. This particular trade is also backed by a massive triangle pattern on the weekly chart that has taken the last couple years to form. Even after the drift down, this pair is at historically extreme highs.
Buy the US dollar against the Canadian Dollar
Rising yields on US bonds should trump a slowing demand for Canadian resource exports. It should be noted that the oil markets are to be watched very closely for this particular trade. Other Canadian exports such as lumber and minerals, are less demanded by the US, Canada’s largest trading partner. Until the housing market stabilises in the United States, much of Canada’s exports will be lacking the traditional major buyers.
US Dollar will Strengthen
The safety-linked greenback will likely push higher, in light of the concerns in the troubled euro area. The catalyst needed for the dollar to uphold its strength will need to be positive fundamental stgelopments which will likely come to light in the middle of the year. 
Long USD, Short EUR
Debt contagion fears in the euro zone will continue to weigh on the single-currency in 2011. The market places the spotlight on Portugal and Spain after Greece and Ireland tapped into the EU-IMF life line. Recovery in the euro area is fragile and any growth will be under pressure. If appropriate action is not taken, the negative spillover effects of tougher austerity measures and recent stgelopments will likely be an unemployment rate nearing 15 percent, with renewed housing concerns. The European Central Bank is expected to remain on the sidelines for most of next year.