Shaun Osborne, Chief FX Strategist at TD Securities, notes that EUR/USD gains might extend for another week before the underlying bearish trend resumes, suggesting to use the current short-term gains as a selling opportunity.
Key Quotes
“Two weeks ago, we suggested that the EURUSD sell-off had perhaps extended about as far as it would go in the short run because positioning, combined with the rate of decline in the exchange meant, by our metrics, that EURUSD was as oversold as it was in 2012 at the height of the Eurozone crisis and Draghi’s “do all it takes” promise.”
“It was not a particularly high conviction view, we stressed but, as it turns out, EURUSD is heading for a second weekly gain (all else being equal), which is something the EUR has only seen once (October) since the decline versus the USD really got underway back in May.”
“We think the squeeze could extend a little more overall in the next week or two as the market works off the oversold condition that has built up; chart-wise, EURUSD could extend to the 1.1650/60 area near-term but, with Greek tail risks rising, ECB QE looming and the Fed staying on rate lift-off message, we do not think EUR gains can extend too far before the underlying trend lower resumes.”
“Look for short-term gains as selling opportunities.”
Key Quotes
“Two weeks ago, we suggested that the EURUSD sell-off had perhaps extended about as far as it would go in the short run because positioning, combined with the rate of decline in the exchange meant, by our metrics, that EURUSD was as oversold as it was in 2012 at the height of the Eurozone crisis and Draghi’s “do all it takes” promise.”
“It was not a particularly high conviction view, we stressed but, as it turns out, EURUSD is heading for a second weekly gain (all else being equal), which is something the EUR has only seen once (October) since the decline versus the USD really got underway back in May.”
“We think the squeeze could extend a little more overall in the next week or two as the market works off the oversold condition that has built up; chart-wise, EURUSD could extend to the 1.1650/60 area near-term but, with Greek tail risks rising, ECB QE looming and the Fed staying on rate lift-off message, we do not think EUR gains can extend too far before the underlying trend lower resumes.”
“Look for short-term gains as selling opportunities.”
