TDMarkets

Short EUR/USD Technical

Short EUR/USD Technical

On February 3, 2017, Posted by , In Uncategorized, By , , With No Comments

Rationale

EURUSD saw a volatile start to the week, and a sharp selloff to test basing support at 1.0623/19, which is holding for now, and indeed, a sharp rebound has been seen.

“Its removal is needed to expose a more important price pivot at 1.0589/80. Removal of this latter level is required to set a top and turn the trend lower again for 1.0454, ahead of the January low at 1.0341.

A break above 1.0775 needed to aim again at our recovery target at 1.0821/28 ‒ a cluster of retracement levels.

Société Générale

Macro – Medium-Term — [Open]

Rationale
“Markets are more likely to focus on whether Trump economic policies buoy corporate earnings and domestic demand. And as long as there’s a good chance that the Fed responds with tighter monetary policy, the dollar can rise.

A 50-bp rise in US real yields can get USD/JPY above 120, the Dollar Index above 106 and EUR/USD to new lows under 1.03. Getting the dollar to rally much further may require 10-year US yields to get significantly above 3%, or a catalyst from elsewhere, either from the French elections or from a deeper loss of confidence in emerging market assets,” SocGen says as a rationale behind this call.

Crédit Agricole

Macro – Medium-Term — [Open]

Rationale
“EUR/USD has been correcting higher on the back of USD position squaring, as for instance related to policy uncertainty returning in the wake of Trump’s inauguration.

Most importantly the latest development seems to be out of line with fundamentals, especially as policy differentials remain out of favour for the pair. Elsewhere, political risks in the Eurozone remain unabated. This should prevent investors from considering fresh longs from here.

From that angle we believe the latest development is corrective rather than a change in trend,” Credit Agricole says as a rationale behind this call.

ABN-AMRO

Currency Pair
EUR/USD

Short from
1.0740

Target
0.9500

Stop/Loss
1.0900

Floating (pips)
+12

Mkt Price (1:47:03 PM)
1.0728

Macro – Medium-Term — [Open]

Rationale
“We remain positive on the US dollar (USD) given our view that the Fed is likely to raise interest rates more aggressively (75bps) than what is priced in by financial markets (50bps).

In short, we see the recent correction (lower) dollar as healthy and an opportunity for investors to position for USD strength. This is reinforced by the fact that demand in the currency options market to hedge against weakness in the USD has reversed.

…We expect the EUR to weaken further versus the US dollar driven by eurozone political uncertainty and monetary policy divergence across the Atlantic. We expect EUR/USD to break below parity and to reach 0.95 over the next 6 months. We re-enter a long USD versus EUR with a target of 0.95 and we have placed our stop loss at 1.09,” ABN AMRO says as a rationale behind this call.

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