The EURUSD chart still looks rather bearish, with the only real bullish angle being that the huge gamma pocket and round number at 1.00 held right at the peak of EUR bearishness. Here is the daily chart, with the 60 and 120-day moving averages.
A close above 1.04 would take out the 60-day moving average and would clear the pivot marked by the thin red line. The thin red lines show that each broken support has held as strong resistance with just one tiny overshoot on the one in early April. Good trends tend to hold resistance at prior support and this has been a good trend.
Selling at the red line and the 60-day with a stop above the 120-day has been a good expression of the trend. A daily close above 1.04 is bullish. 1.0613 is big daddy but that moving average was only tested once (in February 2022) and the 60-day has been way more actionable.
Rate differentials offer nothing bullish in EURUSD, and relative equity performance has been in line with the currency. On the bullish side, BTPs are back to 200bps after twice testing 250bps vs. Germany so you can argue the much-hated TPI (the antifragmentation tool) has worked, to some extent. Then again, BTPs are mostly just a risky asset and they have performed worse than SPX on the massive recovery in risky asset sentiment since mid-June. SPX is making new 3-month highs while BTP spreads are nowhere near the tights printed in May.
To me, this all still points to EUR softness, but as I described in my newsletter yesterday I’ve abandoned the USD side and switched to EURAUD. And if you are bearish USD, that means long AUD, or long carry are the better trades as we enter a two-week period of low vol, out of office emails, early departures, and family tripping.
And the UK you still have plenty to worry about, considering today's Bloomberg piece discussing how Liz Truss may be a threat to the pound and UK bonds.
The chart looks particularly nice, location-wise as you only have to risk 70 pips from here. Short EURUSD here at 1.0346 with a stop loss at 1.0416. Take profit at 1.0166.
good luck ⇅ be nimble
bd
A close above 1.04 would take out the 60-day moving average and would clear the pivot marked by the thin red line. The thin red lines show that each broken support has held as strong resistance with just one tiny overshoot on the one in early April. Good trends tend to hold resistance at prior support and this has been a good trend.
Selling at the red line and the 60-day with a stop above the 120-day has been a good expression of the trend. A daily close above 1.04 is bullish. 1.0613 is big daddy but that moving average was only tested once (in February 2022) and the 60-day has been way more actionable.
Rate differentials offer nothing bullish in EURUSD, and relative equity performance has been in line with the currency. On the bullish side, BTPs are back to 200bps after twice testing 250bps vs. Germany so you can argue the much-hated TPI (the antifragmentation tool) has worked, to some extent. Then again, BTPs are mostly just a risky asset and they have performed worse than SPX on the massive recovery in risky asset sentiment since mid-June. SPX is making new 3-month highs while BTP spreads are nowhere near the tights printed in May.
To me, this all still points to EUR softness, but as I described in my newsletter yesterday I’ve abandoned the USD side and switched to EURAUD. And if you are bearish USD, that means long AUD, or long carry are the better trades as we enter a two-week period of low vol, out of office emails, early departures, and family tripping.
And the UK you still have plenty to worry about, considering today's Bloomberg piece discussing how Liz Truss may be a threat to the pound and UK bonds.
The chart looks particularly nice, location-wise as you only have to risk 70 pips from here. Short EURUSD here at 1.0346 with a stop loss at 1.0416. Take profit at 1.0166.
good luck ⇅ be nimble
bd