YaKa

EURUSD - Strategic Review - Game Plan This Year - Correlation

FX_IDC:EURUSD   Euro / U.S. Dollar
951 1 12
EURUSD             “Risk on / Risk off” correlation has changed a few times over the last 2 decades.

Currently and until the end of the year I see this correlation to remain negative – it could change after Oct15.

Game Plan this year:
Until Mid Apr15: I see a 5% equity correction during which EURUSD             could jump to 1.1300 (risky Leg).
From Mid Apr15 to Oct15: I see a resumption of the equity rally that could lead EURUSD             to test 1.0000.
Year end: I see equity entering a fragile configuration and EURUSD             could squeeze hard towards 1.2000.
2016: if 1.2000 is reached, it might be a short again for other reasons (correlation could change again by then). We will have time to review the situation.

Long Term
Over the next 3years, the USD index is showing a strong pattern.
If there is follow through after a few quarters of consolidation, although it is difficult to imagine right now, the pre plaza accord dynamics may repeat.
Oh dear, worst than parity
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