Dan Murray | Sep 20, 2013 10:18AM ET
There are several reasons I'm looking for opportunities to short the EUR/USD (especially over the next week):
There are of course some reasons to be cautious about going short the EUR/USD:
Last, but certainly not least, German elections will be held Sunday. I don't think this will cause much EUR/USD volatility. Whether we have a “grand coalition,” or whether Merkel has a stronger coalition won't have much of an impact on the EUR/USD IMO. I base this largely on the EUR/USD's generally muted reaction to past German elections. Still, this is something to keep an eye on.
It's worth noting that I've read/heard a lot of interesting opinions arguing that the EUR/USD will go higher. However, most of these opinions are based on technical analysis or the argument that economic data has been better. While economic data has indeed been better (as Draghi and others have said), it has not been better than expected lately, and the slightly better than expected data that we saw in the previous months has already been priced in IMO. In regard to the long recommendations that rely on technical analysis, I don't believe in technical analysis in general, and nothing about these arguments does anything to convince me. (If you want to know more about why I don't believe in technical analysis, please ask.)
All in all, the dovish tone, the less than stellar economic data, and the fact that the EUR/USD outperformed last week mean that I am looking for chances to sell the EUR/USD, especially on any rallies.
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