Why is the Euro Rallying?
July 7, 2010
The euro has come along way since the end of June when it was trading below 1.20. Here are a few reasons why the EUR/USD has rallied:
1. Investors are Growing Less Nervous about the PIIGS - Credit Default Spreads are narrowing
2. Weaker U.S. data has turned the market’s focus to problems in the U.S.
3. Strong dollar in Q2 puts the risk of weaker earnings reports - U.S. earnings season begins next week
4. Major Short Squeeze - IMM data shows that as of last Tuesday, there are still ALOT of short EUR/USD positions
5. Sufficient Demand for Spanish bonds
6. No Major Funding Disaster after the maturity of the ECB’s 1 year lending facility
7. ECB not expected to make any major announcements before Stress Test results
8. Market expects the ECB to announce stress test methodology
Posted in 2009 eurusd forecasts, eur/usd
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July 8th, 2010 at 7:19 pm
I will be waiting to sell EURUSD at 1.3000. Thanks Kathy for your insights.
July 9th, 2010 at 3:59 am
wow kathy you have come a long way. we are all so proud of you here at kingbanksFX. keep up the good work
July 9th, 2010 at 11:56 am
Where do you see the euro vs the dollar in 2 mths time ?
July 9th, 2010 at 3:29 pm
How about this reason - profit taking on short positions. I don’t believe the EUR can mount any significant, fundamentals-based rally. I also believe that the strongest EUR-zone countries like it that way, as long as confidence does not erode completely (hence the bailouts). Germany certainly does not mind a lower EUR, and many others including France and Italy had voiced their disapproval when EUR was flying high (remember 1.6000?)
The conclusion, in my opinion, is to avoid any serious long EUR positions for the time being.
July 10th, 2010 at 8:44 am
Buy EURUSD to 1.3000.Dear Kathy, thanks.
July 10th, 2010 at 8:12 pm
I’m with you Forex Trader. 1.3 is also around the 50% Fibonacci level. Combined with the better news coming out of the US (it hasn’t really been that bad, just below expectations). I’m thinking the July 23 stress test results will hit about the time it reaches 1.3 as well.
July 14th, 2010 at 5:14 am
EURUSD is on the run up to 1.3
July 15th, 2010 at 12:21 am
Its a amazing post very helpful to see the euro rallying.