Profit taking in the relief rally EURUSD 12-5-2015

Profit taking in the relief rally EURUSD

Profit taking in the relief rally of eurusd for the scalpers and intraday traders we are +100 pips from entry and I have just banked the pips. bullish for it

The way from now on on euro will be full of negative news so I would prefer to short it instead of remaining bullish for it.

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In a special note to clients, Deutsche Bank argues that EUR/USD recent painful squeeze doesn’t have much more to run advising that these are good levels to re-enter shorts. DB outlines 3 main reasons behind this call:

First, history suggests that counter- moves in dollar trends rarely go beyond the current correction.

“Of the ten largest dollar moves in history, all but one have witnessed a squeeze greater than 10%. The current 9% correction is very close to historical experience, suggesting we should be at (or very close to) the end of the squeeze,” DB notes.

Second, positioning is much cleaner.

“FX trading volumes rose during the last two weeks’ EUR/USD rally, while the beta of an index of FX fund manager returns to the dollar has already reverted to its medium-term average. IMM data, though lagged, also show ongoing position reduction,” DB clarifies.

Third, the risks are skewed to a renewed turn of relative growth and monetary policy expectations in favour of the USD.

“The next move in EU-US rate differentials is therefore likely to be down, not up,” DB projects.

In sum, DB’s EUR/USD forecast of parity by year-end remains unchanged and believes these are good levels to re-enter EUR/USD shorts.

EUR/USD: Still Bond-Watching; No Short Yet – SocGen

X markets are still bond-watching as 10-year Treasury yields break through 2.3% for the first time in over six months and 10-year and Bunds reach 67bp for the first time in six months too, notes SocGen.

“In terms of the EUR/USD rate, the yield spread has stabilised, and EUR/USD has run out of momentum in the process, but going short of EUR/USD really needs Bund yields to stop rising, at least,” SocGen advises.

“More widely, bond markets need to find stability before we can look for any renewed flow of money into higher-yielding currencies. The best we can say is that much of the higher-beta currency world has proven pretty resilient to the yield adjustment,” SocGen adds.