If you are long he euro, here is what I would be concerned about.
Foreign exchange professionals are now tracking equity flows closely. Usually, it is the other way around – that is, equity investors becoming a transient expert in another asset class.
This is important to recognize because foreign equity investors are now a HEADWIND to a higher euro exchange rate if they begin selling their exposure. As a reminder, there have been inflows into European equity strategies (which are long Euros) for 27 consecutive weeks.
Over the past few years, many foreign investor purchases of European equities have been made on a currency-hedged basis, to remove any risk of a change in the FX rate.
For example, a foreign investor would buy a European stock in local currency and then sell an equal amount of the same.
From an FX perspective, when a US-based investor went into European equities, they effectively bought EUR/USD when they purchased the stock (i.e. they “sold” US dollar cash to buy Euros in a stock), and then hedged their purchase by selling an equal amount of EUR/USD in the spot market.
At this juncture, EUR longs should be more nervous that the DAX and Eurostoxx drop ~3% down to their respective 200-DMA’s, and breaks through it, which would say that the market does not think the underlying economic strength warrants an overshoot in the currency to hurt exporter-based company’s earnings.