From the FXWW Chatroom: Flows were mixed in the Euro yesterday as the pair continued to consolidate following the selloff of Thurs/Friday. Today we will get Euro area CPI data, which follows mixed regional data yesterday that caused little market reaction. The extent to which individual European data points will impact the market for the rest of this year is likely limited. Meanwhile it is month end today, which obviously means material flows could hit the market in either direction. Positioning in the Euro is likely close to flat or marginally short in the HF community. Real money is harder to assess. On the one hand there is likely still a structural underweight, however this community has been a better seller over the past week, so it is possible that some of them may be taking a somewhat more bearish (or less bullish) near term view and adjusting their hedges accordingly. We struggle to want to be short the Euro for anything more than a tactical trade, which we are certainly open to. We are still very much of the view that the next significant move (5% or more) will be to the topside, but this may not transpire for several months, and it is perfectly plausible that we could see further USD strength in the near term, dragging the Euro down another cent or two. The various ongoing narratives in the US (data, fed, Washington) will play the primary role in determining the Euro’s fate for the balance of 2017. We remain neutral/tactical in the short term. 1.1660/70 and 1.1720/30 are the levels to watch above. 1.1570/80 and 1.1480/90 are the support zones below.
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