The change in liquidity conditions in the FX market and the SNB debacle in January have changed market dynamics significantly. Traders know that a major risk event is looming but they have no idea which way the market will move, and more importantly they have no idea by how much it could move.
I’ve heard some traders speculating that EUR/USD could collapse well below 1.0000 upon a Grexit event but will then bounce back again just as strongly.
I’ve heard others speculating that the event could only be EUR positive and that we will be trading back above 1.20 very quickly.
Market positioning is very neutral levels so any post-event moves are unlikely to be driven by liquidations. It’s more likely to be lack of prices which will be the problem.
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