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24 Aug 2015
EUR/USD launches attack towards 1.15
FXStreet (Bali) - EUR/USD keeps rising as more stop loss orders are being tripped on the way up, with real money rumored to have been on the offer at 1.1450 prior to the latest spike just a few pips short of 1.15.
EUR obeys to new risk-off paradigm
Traders should be reminded of th major unwinding of overcrowded eur short currently taking place before our eyes. Euro has become the funding currency of choice courtesy of ECB QE, which means market participants have been borrowing cheap euros and put them to work into riskier assets.
However, as risk-off market profile settles in, these borrowed euro shrt positions are unwound, which leads to the appreciation of the shared-currency in a new paradigm of sorts as long as ECB stays ultra-dovish.
EUR/USD needs change of market dynamics to attract renewed short interest
At current levels, the Euro should definitely be perceived as a value trade for those still expecting a widening monetary policy divergence between the ECB and the Fed, with the pair now over 10 big figures off its trend lows. That said, sentiment is clearly risk-averse, which means that either the dynamics change for more stable risk-neutral/risk-appetite conditions or the Fed clarifies its tightening monetary policy path during this week's Jackson Hole, otherwise, the market may remain irrational longer the USD long herd may stay solvent.
EUR obeys to new risk-off paradigm
Traders should be reminded of th major unwinding of overcrowded eur short currently taking place before our eyes. Euro has become the funding currency of choice courtesy of ECB QE, which means market participants have been borrowing cheap euros and put them to work into riskier assets.
However, as risk-off market profile settles in, these borrowed euro shrt positions are unwound, which leads to the appreciation of the shared-currency in a new paradigm of sorts as long as ECB stays ultra-dovish.
EUR/USD needs change of market dynamics to attract renewed short interest
At current levels, the Euro should definitely be perceived as a value trade for those still expecting a widening monetary policy divergence between the ECB and the Fed, with the pair now over 10 big figures off its trend lows. That said, sentiment is clearly risk-averse, which means that either the dynamics change for more stable risk-neutral/risk-appetite conditions or the Fed clarifies its tightening monetary policy path during this week's Jackson Hole, otherwise, the market may remain irrational longer the USD long herd may stay solvent.