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EUR/USD daily
We may soon be talking about the highest levels in the euro since July 2023.
I wrote about the euro trade on Friday and why it’s been a quiet winner.
“I find it hard to chase anything in Europe but there are a nice series
of higher lows and it would be easy enough to squeeze the shorts, at
least up to 1.12.”
I thought it might take more time to materialize but the US dollar sellers have been relentless today as the bond market shows it’s not (at all) ready to give up on the low-rate trade. That likely presents some upside risks at Jackson Hole but parts of the market are certainly betting that the symposium will be a victory parade on inflation, with the dovish implications that come with that.
The euro side of the trade isn’t great but that leaves room for improvement. HICP numbers are due tomorrow but it’s mostly an uneventful week.
At this time of year though, momentum can do some damage so look for a test of the December highs.