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EURUSD Rich To DXY, Pair Trade Opportunity Per Merrill

Tyler Durden's picture


Merrill's Mary Ann Bartels looks at a slew of technicals today, and focuses on the most relevant one for the day: the EURUSD, although she focuses on the dollar basket DXY. According to her Fibonacci analysis, the EURUSD has a 50% retracement target of 81.49, which "would correlate to a move in the euro to 1.3124." As the EURUSD is trading inside of 1.31 now, this means that purely based on the EUR contribution to the DXY, there is a short-term arb opportunity of going long the DXY which is at 80.90 and selling the EURUSD. Then again, with a firesale in everything EUR related a short leg may not even be required, especially with complete lack of liquidity in the market, and a total lack of appreciation that the US will have to print far more before all this is over.

From ML:

US Dollar Index: Breakout targets 81.439

The US Dollar has been strong as the Euro has been under pressure due to Sovereign debt concerns on the European periphery. Using Fibonacci levels for the recent high and low, the DXY can maintain its strength and move to 81.439. This would correlate to a move in the euro to 1.3124


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Mon, 11/29/2010 - 10:52 | 760784 MeTarzanUjane
MeTarzanUjane's picture

I have a more fanciful trade but I know the Zheeple don't want to hear it.


Even idiots should talk about investments.... [we plan to do a lot of it.] So how do we plan to handle conflicts?

We don't.

You should assume that at all times we are so totally just talking our book it would shock and awe you like the unexpected, early-morning arrival of a cluster of BGM-109C Tomahawks (were you a believer in the importance of "optics" that is).

Mon, 11/29/2010 - 10:57 | 760791 johny2
johny2's picture

Would like to know how much money it takes to move CDS on spanish bonds 24 basis points...

This in turn makes sure of 3 trillion dollar fx market move where you want it.

Anyone has an idea? 

Mon, 11/29/2010 - 10:58 | 760793 Jean Valjean
Jean Valjean's picture


Mon, 11/29/2010 - 11:05 | 760802 Oh regional Indian
Oh regional Indian's picture

If you follow Merrill, get ready to be Lynched.


Mon, 11/29/2010 - 11:10 | 760811 goldmiddelfinger
goldmiddelfinger's picture

Hows that Muddy waters ONP short sale working out?

Mon, 11/29/2010 - 11:18 | 760829 Careless Whisper
Careless Whisper's picture

anyone catch that black box spike in ANF around 10:00

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