Predictions for Euro-Bullish or Bearish?
Predictions for the Euro- Bullish or Bearish?
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Bearish. Long-term parity has Euro fair value at 1.16 - 1.21. It has traded above fair value for a long time, so I think something as low as 1.12 is justified. I am by no means predicting parity, but these are unprecedented times.
I would not go short from 1.24 for a number of technical reasons, but also because it's stupid to fight central banks. I see a bounce back to 1.30 - 1.35, and that's where I'd start building a short position. I'd space things out considerably and put a backstop around 1.50.
Risk to the trade is (i) ECB and by extension, the Fed and the UK amply manipulate the market, (ii) Deflation inflates currency value, and (iii) Worldwide flight to quality prefers the bund. (ii) and (iii) are arguably the same point.
There are better ways to express a bearish view on the euro - consider selling bund futures v. zn.
The Euro is in for a surprise this week... EUR/USD to 1.19 levels by end of the week....
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The worst is yet to come for the Euro and I do not see it bouncing back anytime soon.
Down, probably levels out around 1.18
Down to 1.15-1.19. I think something to remember is that last two times the Euro was at these numbers it went for a 6 month rally. However, keep in mind that this is a totally different situation. It has the potential to turn bullish in the next 2-6 months though I'm not holding my breath. It is certainly an interesting situtaion, and I have to agree with Yesman's strategy.
Definitely bearish
EUR/USD is nearing the key support level of 1.2135...a break below that support would point to 1.1640 into June
Euro is getting dumped.....simple as that. I like to say that in order for a currency to be strong it has to have one of three things-------commodities, strong banking, or manufacuring. EZ doesnt have commodites, They lost their manufacturing market share to china, their banking sector is on the brink. All the large french and german banks are holding billions of this bad PIIGS debt. When euro rode on the back of risk in 09, it had no business whatsoever being @ 1.50. It was pumped up for banks and central banks to get better price to sell it. For example, look where A/U is trading(.84), thats where euro may end up,and thats where it should be, who knows even lower maybe........Right now going into summer, (im currently short from 1.2650), Im looking for 1.1650 before the end of july.
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