Here's my take. I'd like to see E/$ struggle its way down to 1.1900-1.1850 level early next week followed by 2-3 days of back & forth between this level and a top of say 1.2000. My long E/$ is a breakout of this congestion were a move to 1.2500-1.2800 would make sense. We need a catalyst, maybe payrolls? The summer months are notorious for trading ranges and after this move I just don't see a trading range in the mid-lower teens. Rather a TR of mid-lower 1.20's. E/$ has moved 1500 PIPs from March high so a nice retracement is overdue.
Yeah, with another 250-pip whack down this week, I think the market is definitely in manic over-reaction mode. somewhere along the line USD-bulls are gonna get clobbered. but, euro-bulls have been filleted.
Wait until there's actually a reversal before doing sometin stupid, but i'm definitly waiting for it.
Gents, You don't have to be a rocket scientist to understand that the very moment talk begins to erupt about the Fed pausing/stopping, the game will be up and it will be back to the CA (which incidently, will continue to grow - and probably be underfunded along the way).
The scenario you've described was exactly my idea as well. i.e. a downwards breakout from last month's consolidation range 1.20-1.22, towards 1.19, which will prove to be a false breakout and then a rally back up to 1.25-1.30.
I think 1.20s are over for a while; the hardcore longs have been shaken out and the USD carry is starting to be painful for Euro longs. I think it's going to base for a while in 1.15 - 1.20. No impetus to go higher. With the ECB on the verge of cutting rates (or potentially cutting rates due to sluggish growth); there is no reason to be crawy about the euro. Even the CA does not warrant it.
Technical mistake here, this move would be a 100% retracement form last year move, no more no less. But it has to be more or less. CHF i think lost more than last year gains, JPY sure looks to be going that way! Currencies tend to follow each others. Only CAD and AUD stay strong, cause of the oil. I think current level is support, but if not i'd look for a drop beyond 1.18
"No impetus to go higher. With the ECB on the verge of cutting rates (or potentially cutting rates due to sluggish growth); there is no reason to be crawy about the euro." That may be sound reasoning, but... As far as euro having a fluster of strengthening, moving E/U up to and past 1.2700 again, it takes these two factors: INSANE euro buyers and INSANE speculators who buy euro to start putting their money into the market blindly like they usually do. For the USD/US economy to once again come under "evil eye" scrutiny, such as the ole faithful trade gap and current account deficit troubles. It could even manifest as focusing on the US National Dept: Now over $7 trillion: All Greenspan has to do is send out "warnings." Just when things look the most rosey for the USD (1.2000 to 1.1700s?) then comes the storm of bad numbers resulting in fear, panic, greed and maniacal market traders/investors setting in, resulting in the world dumping the USD and moving back into the "safe harbor" of the euro. (Think even central banks (Russia) beginning to convert USD into euro for their reserves a few months ago!) One example: Last year around Sept., there was absolutely NO reason for EUR/USD to start going up, yet it did. It continued to climb 1600-points for no sound reason. The ENTIRE move was based on pure speculation. I kept shorting the euro and almost got bagged but stuck to my eco numbers resolve that there really wasn't any hard fundamentals in place to support the 1600-point euro advance to 1.3665. Turns out I was right. Now look where the price is: crashing through 1.2000. Something to be said for this overall market dynamics scenario.
I can't say I disagree, anything can happen, but 1.20 is certainly an important level and until bad news from the US hit the market, I don't see the USD going much lower vs the euro; long term I think Euro may become a good buy again, Buffett is certainly making that case clear. Looks like he's not the one dumping euros but I'm sure he's hurting significantly. 120 is now resistance and I'm sure we will retest the euro sellers' resolve many times.