30 Jan 2015
EUR/USD: Sticking with downside momentum - Nomura
FXStreet (Bali) - Jens Nordvig, FX Strategist at Nomura, remains committed to play EUR/USD from the short side, noting that as long as there is no risk of a shift in Fed communications, a possible downside break in EURUSD remains the main base case.
Key Quotes
"At this point, we are inclined to keep our long USD exposure, at least until we see a risk of a shift in Fed communications. In fact, we want to add some exposure to a possible downside break in EURUSD."
"If risk sentiment stabilize, we should see portfolio outflows (driven by fixed income flows) accelerate, and we could see EURUSD re-test the lows from Monday morning of around 1.11 fairly soon."
"This may require that the bad news out of Greece stops. But given how much bad news we have already gotten, that may now be the central case for the next few weeks (perhaps until the Eurogroup meeting on February 16)."
"That said, we don’t want to commit to long-dated downside structures, as it is possible that the move could be quite concentrated in the short-term."
"Linked to this, the March FOMC meeting might see a shift in tone, and we want to play momentum before that."
"At this juncture, we invest $100k premium into a 3-week put spread in EURUSD with 1.12 and 1.08 strikes. The trade costs about 0.56%, providing max leverage in the region 6:1."
Key Quotes
"At this point, we are inclined to keep our long USD exposure, at least until we see a risk of a shift in Fed communications. In fact, we want to add some exposure to a possible downside break in EURUSD."
"If risk sentiment stabilize, we should see portfolio outflows (driven by fixed income flows) accelerate, and we could see EURUSD re-test the lows from Monday morning of around 1.11 fairly soon."
"This may require that the bad news out of Greece stops. But given how much bad news we have already gotten, that may now be the central case for the next few weeks (perhaps until the Eurogroup meeting on February 16)."
"That said, we don’t want to commit to long-dated downside structures, as it is possible that the move could be quite concentrated in the short-term."
"Linked to this, the March FOMC meeting might see a shift in tone, and we want to play momentum before that."
"At this juncture, we invest $100k premium into a 3-week put spread in EURUSD with 1.12 and 1.08 strikes. The trade costs about 0.56%, providing max leverage in the region 6:1."