Euro Dollar Rate Forecasts for 2014-2015 - page 18
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Forget about Euro
That is the most manipulated currency at the moment - every EU moron is screaming "save the euro". They are going to use every trick in the book - including straight forward stop loss hunting
Forget about Euro That is the most manipulated currency at the moment - every EU moron is screaming "save the euro". They are going to use every trick in the book - including straight forward stop loss hunting
They are already doing it - waiting to see which one is going to brag about doing it
EUR/USD Short-Term Direction Remains Unclear
Despite the turmoil in the financial markets around a possible 'Grexit', the EUR/USD has not gapped down more than expected, and found support around the demand zone of 1.1000. The overall trend is clearly down, but in the last several weeks, the pair has been moving sideways between the weekly supply and demand zones, and as long as they are holding, the direction is unclear.
However, on the monthly chart, the pair is hanging in the air, with the nearest demand zone around 0.9800. Breaking the weekly demand zone below 1.0460 might send the EUR/USD all the way down to this monthly demand zone, while breaching the weekly supply zone above 1.1465 could revive the bulls.
Here are some important supply and demand levels on weekly, daily and 4-hour levels:
Weekly demand zone: 1.0825-1.0460
Weekly supply zone: 1.1195-1.1465
Daily demand zones:
1.1000-1.0950
1.0900-1.0820
1.0740-1.0660
Daily supply zones:
1.1130-1.1280
1.1340-1.1530
1.1545-1.1680
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World’s Biggest Currency Trader Likes Euro Shorts Versus Yen
Citigroup Inc., the world’s biggest currency trader, said it prefers to bet the euro will decline against the yen, rather than against the dollar, as traders seek haven assets amid the turmoil in Greece and China.
The yen has strengthened 3.1 percent versus the euro in the past month, outpacing all its major peers. Japan’s currency advanced to the strongest in six week against the euro on Monday after Greek voters rejected austerity measures and China’s stock market rout spurred demand for safer assets.
“There are better places to play your shorts than euro-dollar,” Todd Elmer, a Singapore-based strategist at Citigroup, said in an interview on Monday. The yen “is well positioned on the domestic front,” he said.
The euro declined 0.7 percent to 135.50 yen as of 7:32 a.m. in London after falling to 133.70, the weakest level since May 26. The 19-nation currency dropped 0.5 percent to $1.1054 per dollar after sliding as much as 1.3 percent.
The euro is set to fall to around 130 yen in the next month or so, Elmer said.
Hedge funds and other large speculators have been cutting bearish positions on both the euro and the yen in the past month, data from the Commodity Futures Trading Commission show. This is a positive for traders seeking to bet against the euro as it means there is less chance there will be an increase in short covering.
Improving Sentiment
The Bank of Japan is unlikely to add to record monetary stimulus “for the time being,” Elmer said. Sentiment among large Japanese manufacturers improved for the first time in three quarters in June and other data have been strong, providing some comfort to the central bank, he said.
“The politics around yen weakness has really changed where the government is no longer going to be cheerleading for the yen to sell off,” he said.
BNP Paribas SA also favors selling the euro against the yen, predicting the single currency will weaken further to between 130 and 132 yen, strategists including Steven Saywell, global head of foreign-exchange strategy, wrote in a note dated July 6.
Risk-Off Trade
“This trade has the benefit of gaining short euro exposure but also benefits from yen appreciation, which is typical risk-off price action,” the analysts wrote. “This also avoids a potential reversal in euro-dollar that occurred last week.”
The euro tumbled as much as 1.9 percent to $1.0955 on June 29 before finishing 0.6 percent higher at $1.1236 in New York trading.
Citigroup also favors selling the euro against the pound amid speculation the Bank of England will raise interest rates, Elmer said. The single currency weakened 0.7 percent to 70.92 pence on Monday, having tumbled 8.7 percent this year.
Sixty-one percent of Greek voters backed Prime Minister Alexis Tsipras’s rejection of further spending cuts and tax increases in an unprecedented referendum. German Chancellor Angela Merkel and French President Francois Hollande called for an emergency leaders’ summit on Tuesday.
“The news flow over the next several days is likely to be negative,” Elmer said. “The euro’s going to underperform.”
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Goldman Sachs EUR/USD outlook ... looking for a break to signal next move
Comments on EUR/USD from Goldman Sachs:
Grexit Or Not, Sell EUR/USD targeting 1.02 – Danske
The Greek crisis seems to be heading to a showdown on Sunday’s EU Summit.
But regardless of the results, the team at Danske see a sell opportunity:
Here is their view :
The Greek ‘No’ sent EUR crosses lower but the initial move has already partly reversed. We see two main reasons for the limited reaction in the FX market: (1) should a Grexit materialise it would not be a ‘Lehman’ scale event, and/or (2) FX markets have learnt an important lesson from the currency war of H1, i.e. that central banks are highly alert to currency moves.
Lately in relation to a first Fed hike the concerns of the FOMC have concentrated on the impact on financial conditions of the Greek fallout. This leaves us in a situation where the near-term direction for EUR/USD is down no matter what the Greek outcome.
If a Grexit is avoided, the Fed is on track to hike sooner rather than later providing support to the USD. If a Grexit arrives, the ECB will signal its readiness to act (but may not actually have to deliver more QE) and weaken the EUR. However, in either outcome, support will be concentrated on one leg, which suggests that parity for the cross is still not within reach.
We see the cross at 1.04 in 3M. Note also that the current downward pressure on oil prices is another potential source of EUR weakness: the oil price fall limits the scope for a rebound in eurozone inflation over the autumn, everything else being equal. This could in turn fuel expectations that the ECB needs to do more to steer the euro area away from lowflation.
Speculative accounts should maintain short EUR exposures against other majors; notably we see potential in CHF in the event of a Grexit and recommend being short EUR/CHF if Greece goes. Grexit or not, we see good but different reasons for EUR/USD to head lower. We are short EUR/USD in our Danske FX Trading Portfolio.*
*Danske maintains a short EUR/USD from 1.1119 targeting a move to 1.02.
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4 reasons Credit Suisse expects the euro to fall
Why the euro will fall, from Credit Suisse:
While Greece has so far not proven a powerful negative for the EUR, a number of other factors are now aligning to push EUR lower especially vs the USD and JPY, argues Credit Suisse in its weekly note to clients this week.
1) Relative data surprise is clearly moving against the EUR and in the USD's favor.
"This is in line with our economists' view of rebounding US growth momentum. EURJPY relative data surprise is already at stretched negative levels," CS notes.
2- EUR portfolio flows may now also suffer as we approach the heavier summer government bond redemption schedule.
"We see a risk that a portion of the market may only choose to rebalance holdings away from the low-yielding EUR only once existing holdings expire," CS clarifies.
3) EM weakness has in the past coincided with EUR downside.
"In particular, any pressure on EM reserves, which we consider quite likely in this environment, would result in EUR selling to replenish USD reserve allocations. This would exaggerate the impact from the downward pressure on EUR allocations evident in the COFER data," CS adds
4) Finally, the fast oil price decline is likely to pose new risks to the inflation outlook, as the ECB's inflation projections appear too optimistic in any case.
"This is likely to impact more markets than just the EUR, yet the low starting point combined with the Greek risk overlay for growth and consumer/business sentiment may make it more powerful for the European currencies," CS argues.
CS maintains its EUR/USD forecasts at 1.05 in 3-months and 0.98 in 12-months.source
Case For EUR/USD Downside Is Strong With Or Without Greece - Goldman Sachs
The uncertainty around the negotiations between Greece and its creditors means the market has low visibility, unable to trade beyond the immediate headlines, notes Goldman Sachs.
"In this situation, the market seems persistently to err on the side of optimism, discounting negative developments to focus on the prospects for a positive resolution. This has been reflected in the modest reaction in peripheral spreads, equities and the EUR," GS adds.
"After all, EUR/$ reflects the market’s expected range of outcomes and the probabilities it assigns to these. Our read is that the market continues to expect a last-minute deal, a view that is understandable given that this has been the outcome in every previous confrontation over Greece. Most simply, this should be apparent from the bounce in EUR/$ on this week’s headlines that some kind of accommodation could be found by the weekend," GS notes.
"In short, even as 'Grexit' risk mounts and is arguably more elevated than ever before, the market does not believe it. We continue to see further escalation as a catalyst for EUR/$ to move near parity, given that ECB QE, which buffers European stock and bond markets, means that EUR/$ downside is the only reasonable hedge for investors, unlike back in 2011/12," GS argues.
"Our broad G10 FX views remain unchanged. We expect further Dollar appreciation against most of the G10, driven by rising US rates and reflecting the outperformance of US fundamentals. We forecast USD strength to be most pronounced against the EUR, JPY and the commodity currencies. Beyond the USD, we expect the GBP to be stronger vs the EUR and commodity currencies," GS projects.
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BNP on Greece talks - Continued lack of clarity suggests modest risk-off sentiment
Comments from BNP on the weekend talks (that are still continuing)
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Note - the new deadline appears to be Thursday
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The Greek situation remains ongoing at the conclusion of the Eurogroup meetings over the weekend, notes BNP Paribas.
"According to press reports PM Tsipras has been given three days to pass a list of reform measures through parliament before obtaining interim financing and starting negotiations on a new program," BNPP adds.
"The ECB will also be in focus on Monday and we assume the ELA will be left at the current level while Greek banks will likely remain closed at least until mid-week. The ECB meeting on Thursday could thus be dealing with a very different risk scenario depending on how the Greek parliament vote unfolds," BNPP argues.
"In the negative case the ECB would likely signal or deliver new easing measures to counter market disorder and contagion, which would be EUR negative. Under a positive Greek scenario we still believe that any EUR relief rally will prove short-lived, as short EUR positioning has been mostly unwound," BNPP projects.
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