Goldman Sachs – EUR View

EURUSD continues its relentless bid tone with a desperate grab for liquidity in fixed income markets pushing all yields higher, even in Switzerland. It is tempting to suggest that the worst is over given the 18bps selloff in bunds and subsequent rally back, but the market is obviously still in a very fragile state and unlikely to take much of an FX view ahead of NFP. 

In the meantime, the EURUSD higher trend is very much intact with the bigger picture reflation/ECB QE unwind trade, technical back drop, and flow story all supportive.  Barring a large NFP surprise (preferably in both job gains and AHE) or sharp reversal in European fixed income, it is unclear to me who the incremental seller of EUR is, even at these elevated levels. US corporates seem content to wait, real money names who typically fade these moves are actively covering shorts, central banks are buying given the back up in yields/squeeze in crude, and macro names have been quiet, likely more focused on their equity positions. 

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