RTAS Thoughts On The EUR/USD
Littlefish FX | Nov 21, 2013 02:59AM ET
Some pretty interesting moves today with the hint of a ECB cut to negative rates. Check out more in Mark’s post but my personal thought is that is difficult to believe as it would cost Europe a fortune and it could cause some major headaches for the large banks.
The EUR/USD is at a nice little place though back at our initial entry point, it happens sometimes.
I guess few interesting plays I wanted to highlight though.
One is the instant reversal on good European data tomorrow, especially out of Germany and a Draghi comment playing down negative rates. Afterall ECB Sources weren’t exactly right about no rate cuts.
This essentially could see a full reversal a break of 1.3551 would open the door to a much larger move (1). I see this as low probability in the immediate term.
With Retail Traders buying, some form of weak data or Draghi comments confirming the sources, and I think we breach the 1.3390 and push 1.3300 very quickly. A nice breakout play to the downside in this case to try pick up 90 pips on the day, I think this is probably got a good chance of happening and is my option (2).
Final case is good data out of Germany, a mixed message from Draghi and some weak US jobless figures, we potentially push the 1.3500 / 1.3520 mark then we hold around this level, which I would take as pretty Bearish and would likely be followed by a push towards the 1.3000, this is my option (3).
As ever key for my trading is how the Retail Traders react and frankly they love shorting this at the moment as all the news feeds keep jumping on every possible downside push in the EUR/USD, if Retailers jump on the band wagon we definitely go higher, if not then I think we could start to see a push lower again.
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