EUR Fundamentals

The speech which moved the markets:

Mario Draghi: ECB press conference - introductory statement

Draghi usually moves the market with his speech but he did not move it last Friday. Here is his outlook on the European economy:

And the latest Draghi speech from 3. of October for ya:

Mario Draghi: ECB press conference - introductory statement

I’ve been holding the short position on EURUSD since August. When you say “long-term” or “short-term” what do you exactly mean? You see, these concepts are too indefinite. Is it a month, a half of the year? Anyway, thank you for your post.

The Eurozone keeps showing weak fundamental data and it seems like this is not going to change any time soon.

It’s indeed hard to pick up the bottom of the EUR/USD down-trend, although the Eurozone is still weak, at some point a future economic recovery will start to be priced in and the EUR/USD trend may stop or reverse.

I am holding short EUR/USD too and running a EUR/USD trend indicator that has been showing “DOWN” trend signal for months. I will close my short as soon as the indicator signals a “FLAT” or “UP” trend - check it out at cxinvestor[dot]com.

If the indicator goes “FLAT” but then resumes down-trend, I would rather re-open my short again - it’s a simple risk management strategy that works well for me.

The Fed was decided for a interest rake hike in early 2015. Now it looks like they are thinking it could happen in late 2015. Anyway, US economy seems to be getting stronger than in the last months. Meanwhile ECB has plans (they started already) for QE to try to reactivate the economy and to push up inflation, which is too low.

It looks to me that in the medium term (weeks to months) the sensible option is to short EUR/USD. The current bounce up that we are seeing now in the pair could be a corrective movement (many people cashing profits).

I cashed a nice 800pips move shorting the pair but at the moment I’m out waiting for a clarification on what is going to happen. It looks like all the economies are slowing down (NZD, AUD, JPY, China, EUR… GBP not clear…) but for the US.

Thoughts on this?

Just in case you have some EUR pairs open (or you would like to open one), here is Draghi’s speech from yesterday:

Mario Draghi: Hearing at the Committee on Economic and Monetary Affairs of the European Parliament

Use those fundamentals and benefit from them!

EUR will go up before it falls, don’t take shorts too early, everyone is expecitng euro short, which is a bad sign.

Fundamental data out of the Eurozone points to a weaker Euro, especially if the FED moves ahead with a rate hike.

yes, that is true, EURUSD fundamentally should go down, today Draghi confirmed this move by strongly supporting the QE in Eurozone.

There is little change in the last FOMC minutes: states that member should watch out inflation number
disinflation become main theme recently and I believe THE FED could delay their first rate hikes
still, my bias on EURUSD is bearish
go short after some pullback

Now the ball is on Draghi said, market is discounting serious QE from ECB, if Draghi dissapoints these expectations EUR can bounce back to the previous levels.

EUR bond yield drop to record low
Is It sign that bond market has priced Mario Draghi’s more aggressive QE?
We know the answer…

yes, but Euro has been rebounding for 2 days. We have to wait a few more pips up to take shorts.

The end of the month…
we should be more careful
(though the fundamental is very clear for this pair)
usually investor rebalanace their portfolio before the year’s end
in my trading career, I never trade in mid December till mid january

EURUSD has been down very steeply and there is support in position, this might make it more on a negative trend.

Hi orni3008,

I am not sure if EURUSD short is still the best trade out there. EUR data are coming out positive lately and USD seems to be overbought to me.

Good luck,

Mr Draghi talked about the Eurozone’s economy again so it is good to keep it in mind what he said:

Mario Draghi: Stability and prosperity in Monetary Union

Another speech from Draghi:

Mario Draghi: ECB press conference - introductory statement