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Mid & Long Term

EURUSD - ARE WE IN THE MIDDLE OF THE PAIN TRADE ? ...

Thursday, December 6, 2012 5:26 AM GMT


…. EURUSD IS TRADING ABOVE 1.3000 AND FLIRTING WITH THE UPPER BORDER OF THE MENTIONED CONGESTION AREA ESTABLISHED OVER THE LAST TWO MONTH….

IT LOOKS LIKE A PAIN TRADE FOR THE MARKET. THE MOOD IS NOT IN FAVOUR OF BUYING EUROS BUT WITH THESE LEVELS CLOSE TO YEAR END, PRASSURE IS INCREASING TO MAKE A DECISION WITH EXISITING EUR SHORT POSITIONS.

WITH LIQUIDITY IS DECREASING MOVES CAN BE MORE ERATIC TILL NEW YEARS EVE AND THE RISK IS STILL TO THE UPSIDE.. ? ?



 

…. LOOKING TO THE NEXT PICTURE THE MARKET WAS  EXPECTING A DOWNSIDE TEST OF THE WIDE CANNEL IN JULY ESTABLISHED OVER THE LAST 5 YEARS.

EVEN IF EURUSD IS TRADING UP TO 1,4000 THE CANNEL IS STILL VALID.

WITH SOME EXPECTED US-AUSTHERITY MEASURES BECAUSE OF THE FISCAL CLIFF, US FISCAL POLICY WILL REDUCE SPEED EVEN IF MONETARY POLICY’S NOT GOING TO CHANGE SOON. THIS SHOULD HAVE A NEGATIVE IMPACT ON US GROWTH AND THE GROWTH DIFFERENTIAL BETWEEN EUROPE AND THE US.

POTENTIALY IT’S ANOTHER TRIGGER CHANGING THE EUR/USD EXCHANGE RATE.

GIVEN COMBINATION OF LESS TAIL RISK IN EUROPE, A GENERAL NEGATIVE MOOD ABOUT EUROPEAN INVESTMENTS RESULTING IN AN UNDERWEIGHT OF EUROPEAN INVESTMENTS, THE QUESTION IS WHATS HAPPEN IF THE DATAS ARE CHANGING IN FAVOUR OF EUROPE?

WILL IT FORCE INVESTORS TO CHANGE THEIR EXPECTATIONS ABOUT EUROPE FINALLY AND ALSO THEIR POSITIONING  ?...



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