Goldman Adds Short EURUSD To "Favorite Tactical Themes", EURUSD Target Dropped To 1.18

Tyler Durden's picture

At this point we have given up trying to figure out the squid's dodecatuple reverse psychology, especially when this call openly contradicts everything spouted by the firm's equity strategists.

The latest from Goldman's John Noyce

  • A lead indicator of EURUSD’s sharp decline from the 12th April high at 1.3692 to the 6th May low at 1.2510 was given by widening in Eurozone-periphery/-core spreads
  • These spreads have fallen off radar screens over the past few weeks due to the Eurozone “Stabilisation Package”
  • However, Spanish yields are now beginning to widen and the Spain/Germany 10-year spread is moving to new all time wides on our data
  • With this in mind it seems the risks of an eventual downside break from the recent range on EURUSD are again increasing
  • At this point the USD Index has the clearest pivots and structure from which to calculate targets…
  • …the highs of the recent consolidation are clustered 87.39-87.48. A close above that region would target 89.8…
  • …assuming an equal %age move this would target approximately 1.18 on EURUSD
  • Overall, it looks like the chances of a downside break from the recent range on EURUSD to target 1.19-1.18 are increasing
  • As a result of this we’re going to add Bearish-EURUSD to our Favourite Tactical Themes…
  • …given the 1.18 target is quite close we’d close the consider the theme closed if spot trades above 1.2355