EUR/USD Recoveries Are For Sale: Targets & Levels – JP Morgan
DAVID TEPPER: Short The Euro
Billionaire David Tepper, who runs $20 billion distressed debt hedge fund Appaloosa Management, said that he's short the euro during a "best idea" talk at the Robin Hood Investors Conference.
Tepper also recommended very short-term EU debt, like bonds maturing in 2 to 3 years.
He believes that the European Central Bank will have to loosen monetary policy further and expand its balance sheet in its effort to stimulate the euro zone.
The Robin Hood Conference, which has a stacked line-up of hedge fund heavyweights, is off limits to the media. Business Insider has a source inside the event.
Tepper also said that you have to get rid of the 500 euro note, according to our source.
Tepper, who is one of those closely-followed names, has one of the best long-term performance track records in the hedge fund space. He has also been the highest paid fund manager the last two years.
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EUR/USD has managed to bounce from 1.25 but can it continue recovering or is it just a correction before the a bigger fall?
The team at JP Morgan sides with the latter view stating that the recoveries are for sales and provide explanations and levels:
Here is their view :
The defense of the main T-junction at 1.2502 (76.4 %) in EUR/USD opened the door for an internal 4th wave recovery to 1.2959 (int. 38.2 %), where a fresh selling opportunity would be given, argues JP Morgan.
An importunate sign to watch here, according to JPM, is the failure so far to clear first resistance at 1.2797 (monthly breakout line).
This could be an indication that the internal 3rd wave decline is not done yet, which keeps 1.2418 (wave 3 projection) and 1.2214 (weekly trend) in focus, JPM projects.
“To confirm a straight extension lower and to delay the expected 4th wave recovery it would however take a decisive break below 1.2569 (minor 76.4 %) on hourly close (i.e. below 1.2550),” JPM argues.
“Only a decisive hourly close above 1.2959 (i.e. above 1.2980) would on the other hand start weakening the prevailing down-bias in favor of a stronger recovery to 1.3246 (int. 50 %),” JPM adds.
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