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Old 10-20-2009, 10:22 AM   #1 (permalink)
LFX
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Post EURUSD - 1.50 is the peak?

Whilst the basic case for being long the Euro remains in place (plentiful liquidity, diversification flows) it is starting to feel like the latest leg of this rally from the post-payroll lows of 1.4480 may be running out of steam.

We are running into a pretty heavy schedule of Q3 earnings over these next couple of weeks, those companies whose earnings are most sensitive to final demand have been pretty disappointing thus far. If this trend continues to play out then this is hardly a promising sign for those who had hoped the consumer would carry the baton for the next leg of the recovery and could well weigh on risk sentiment.

Technically the momentum indicators are starting to look a little stretched and this has been a decent pre-cursor to a pull back during this rally.

The ECB is clearly unhappy with the continued strength of the currency. Whilst they need to get more on-message than they have been thus far (i.e. stop talking about 5yr/5yr inflation expectation concerns and suddenly switching the focus from headline inflation to core), Benanke’s swipe at East Asia’s currency manipulation today was at least an implicit acknowledgement from the Fed that the ECB has something of a legitimate grievance.

Sell EUR/USD around high 1.49s for the target of 1.4750 and then 1.4503 (55 day) but leave a stop around 1.52.
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Old 12-25-2011, 03:58 AM   #2 (permalink)
 
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