It is tough to envision positive future for the euro during such divisive social stance we are witnessing across the world. Euro’s problem is not a Fed hike but it is experiencing the existential threat. If it is all about rate divergence then it can be mitigated or it may not have such downside reaction for one of the most forgone conclusion in Fed’s history. Sellers were just waiting for the event risk to pass and now they are back to sell any rallies. We are short Euro and will keep on trading from the short side unless something changes drastically.
Why it is going to be tough for the euro to survive?
Euro’s future is hanging on German tenacity. UK is out. For France, troubles are just getting started. Italy – who cares ?!. Other little suckling states are insignificant anyway. Now once Markel is gone, who knows what the next Premier will do. But one thing is sure that, next government will not be very accommodative.
Seems like big players have already figured that out and piling into German bonds, even though negative yields are about to touch full percentage point.
The idea of big western alliance to thwart Russian advance is already dead. World war II has been forgotten and people hardly learn anything from the history. It is sad to see that people refuse to live with love and harmony but this is the reality. Euro break up and then demise is just a question of when.
How to trade it?
It’s currency market so you just don’t short or buy being dogmatic like a bozo. Here is the cheat-sheet to trade euro.
– If you are short from good levels, preferably above 1.0900 then stay short.
– Want to initiate short then, wait for the bounce towards next resistance. Every 50 pip up is a challenge for EUR/USD so 1.0550 is first. But 1.0600 and 1.0650 is very attractive to short.
– Until EUR/USD can rise above 1.1000, sell any good rally.
Hopefully see you all at parity junction 😉
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