We have gone short EURUSD at 1.0937 with an initial target on 1.00-1.03 and an expectation eventually of a move towards 0.9000
– Our stop loss is at 1.1160
– We are using 25% of capital
– Overall we do not believe anything has changed in the building blocks for this story and Friday’s disappointment and position squeeze provide better selling levels
– We still believe the present backdrop remains similar to 1999 (payrolls printed an initial number of +46k in March 1999 (Feb produced an initial number of 276k which was eventually revised up to 411k). In April 1999 the March number was revised up by about 60K as April initial number came in at 234k (eventually revised to 376k)
– Before Friday’s initial number, the final number average of the prior 6 months has been 295k.
- Horizontal resistance, channel top and the 55 day moving average converge at 1.1037-1.1111 We have been testing this area since 18 March without success
- Today’s “flash crash” with no apparent reason also suggests to us that the vulnerability to the downside on EURUSD is returning
- Recent developments in the Greek bond market (see below) are also unlikely to be a positive for the EURO
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