Why is the Euro rallying

Can someone please explain where the logic lies in the Euro making massive gains considering the Thursdays ECB meeting is likely to cut rates further? wtf?

Hi UK Forex… Welcome…

Euro shorting was funded by using the Euro as a ‘carry’ currency, but as the EUR/USD was traded down to that 1.05-1.15 range, shorting it lost its ‘carry’ potential; off-loading (‘covering’) those massive/institutional Euro-short positions has led to the Euro rally of late, rather than a bid for the single currency…In other words, this is motivated more by a lack of bears than by a true turn in sentiment…

I hope that makes sense…

What I mean is at midday today the EUR was down to GBP, USD and JPY by about 80 pips then in the space of about 2 or 3 hours the EUR was up against all GBP, USD and JPY by 50pips which is a change of about 130pips. I checked the economic calender and there was nothing in terms of reports or news releases so I’m just trying to figure out what happened.

The reason the EUR was down 80pips against those pairs in the first place is the overhanging ECB release which will surely mean more rate cuts. So why the stupid reversal? It makes no sense…

It’s like someone telling you all the fruit is rotting and barely edible and then going out and buying it in volumes…

I understand your frustration…

Here are my latest thoughts on this accursed pair:


If someone here can answer this question accurately, I’ll let them name my next child.

Am I worried- no. Why? Because there isn’t a single person on this planet that will ever be able to apply logic to an illogical process.

The markets aren’t cause and effect, black and white, A + B always = C.
The markets are irrational, and can remain that way much longer than you and I can remain solvent.

Trading is not about being to explain why something is happening, it’s about having the ability to REALIZE what’s happening and the FORTITUDE to take a financial position.

You’re using words like:

Rather than looking for someone else to explain to you what’s happening, why don’t you take a shot (literally and figuratively)?

“I see that the EURO is making massive gains whilst the possibility of a rate cut exists- I’m going to be getting long @ x.xxxx targeting x.xxxx.” “My long position is based on the facts that x, y, z, etc etc”.

Do you think FX desks around the globe are staffed with people who would ask another individual where the logic lies that something that hasn’t occurred yet is making an impact on a tradeable asset?

heres the logic explanation.

because theres more buyers then sellers

easy as that

sorry i couldnt resist :smiley:

its ralying because its at a low. at some points fundamentals and logic are weaker then hope and grief. people see it as undervalued and thats the whole storry behind it. nothing more nothing less.


both are right with what they said.

you souldnt look to much for the “why” at the moment, look for good entree points and to make some money.

Just like mercedes benz in crisis year of 2009 wasworth 18 billion euros all shares combined while the company produced a surplus of 7 billion a YEAR - its no logic behind some actions trust me.

Or tesla, a comany producing absolutely nothing but depts since almost 10 years now beeing worth 60 billion.
or facebook beeing worth 100 billion while producing surpluses of 100 million (buy that company and youll need 1000 years to pay it off by tits ROI)


just follow where the money is dont look for logic in crowds

Hi UK Forex,

I highlighted the three currencies you mentioned. If you see a currency gaining value, it does not really always mean it is strong. Ask the question if it is EUR strength or USD, GBP etc. weakness. For example the GBP was very weak lately so a EUR rally maybe does not have any EUR strength, only GBP weakness.

Hope this helps a little.

Zarterose, Jake (ForexUnlimited) and Turbonero all offer great answers…


over to you, Uk Forex!

Make your bets: Euro bull or Euro bear?

Trade safe.


Happy Trading.

Hello Uk Forex,
In my view given the aftermath of ECB December meet, investors are now being cautions ahead of the Thursday. the extreme short squeeze at the time of December meet literally burnt down the hands of euro bears as ECB came out with less easing measures than expected so they are being cautious now ahead of Thursday meet. no doubt, if ECB comes up with proper easing measures as expected this time, it will surely induce technical selling pressure over the pair

Ah this might explain it. Thanks.

well i guess i am able to resolve your confusion to some extent, well i would love to have further discussions on Euro its the most interesting pair for me

These markets are so complacent… What did they expect Draghi to do: bankrupt the Eurozone for the sake of a ‘surprise’?

The Euro rally in December was a joke, and so it was today…

There is nothing left to say…


Why the ECB’s actions failed to have the desired effect.

In this video, Chief Currency Strategist John Kicklighter (DailyFX) looks at ‘The End of Monetary Policy’, taking ECB, BoJ, and Fed as examples of how central banks’ influence on the market is now fading.

This made plenty of sense.