28 Apr 2015
EUR bears vulnerable to a short squeeze topside – MP
FXStreet (Barcelona) - Dean Popplewell, Director of Currency Analysis at MarketPulse, believes that the current appreciation is EUR makes the bears more vulnerable to a short squeeze than before in case the FOMC statement is perceived as dovish.
Key Quotes
“This week’s main event is tomorrow’s FOMC meeting, and the reason why investors are trying desperately not to make any strong moves ahead of the outcome. The problem is that a pre-meet creeping EUR will be making life rather difficult for the EUR bear. They are now much more vulnerable to a EUR short squeeze topside than before.”
“U.S. policymakers are expected to convey the message that first-quarter data was an aberration, and that they see growth proceeding at a ‘moderate’ pace. With recent retail sales and employment data continuing to show signs of weakness has the USD underperforming and allowing investors to push the timing of the first U.S. rate hike further out the curve.”
“With the EUR at such elevated levels pre-meeting, fading FED rate hike expectations, supported by a soft patch of U.S. data since the March meet, will risk the squeeze of even more EUR shorts post FOMC.”
“June had been the forerunner for the first-rate hike, but fixed-income dealers are now looking to September or even beyond for the Fed’s rate normalization process to begin. The possibility that the Fed meets dovish expectations, especially with the dollar at current levels against the majors, could easily instigate an elongated EUR short squeeze beyond last months capped highs in the €1.10’s.”
Key Quotes
“This week’s main event is tomorrow’s FOMC meeting, and the reason why investors are trying desperately not to make any strong moves ahead of the outcome. The problem is that a pre-meet creeping EUR will be making life rather difficult for the EUR bear. They are now much more vulnerable to a EUR short squeeze topside than before.”
“U.S. policymakers are expected to convey the message that first-quarter data was an aberration, and that they see growth proceeding at a ‘moderate’ pace. With recent retail sales and employment data continuing to show signs of weakness has the USD underperforming and allowing investors to push the timing of the first U.S. rate hike further out the curve.”
“With the EUR at such elevated levels pre-meeting, fading FED rate hike expectations, supported by a soft patch of U.S. data since the March meet, will risk the squeeze of even more EUR shorts post FOMC.”
“June had been the forerunner for the first-rate hike, but fixed-income dealers are now looking to September or even beyond for the Fed’s rate normalization process to begin. The possibility that the Fed meets dovish expectations, especially with the dollar at current levels against the majors, could easily instigate an elongated EUR short squeeze beyond last months capped highs in the €1.10’s.”