Two Charts To Strike Fear In The Heart Of Euro Bulls

Tyler Durden's picture

Something changed in the FX market after QEternity was announced. As CitiFX notes, active traders in the EURUSD market had generally behaved as trend-followers throughout the summer - in the lead up to QE3; but in the last few weeks, that pattern has changed dramatically. The heavy selling of EUR which took our positioning indicator from a record high in mid-September to negative territory came despite resilience in spot. Thus investors now appear more inclined to sell into strength from EUR. This could reflect frustration with EUR’s inability to sustain breaks beyond recent ranges and desire among investors to lock in gains among longs. Combine this positioning with the fact that EURUSD is trading over 300 pips rich to its swap-spread-implied fair-value and perhaps trading the range - as opposed to looking for breakouts - is a better bias currently.

CitiFX Positioning vs EURUSD...


EURUSD vs Swap-Spread-Implied 'fair' value...


and the implications for US equities are a drop from 1434 to between 1400 and 1360...

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El Viejo's picture

The bus won't go:

The politician says, "Everyone get out an push. I'm the


The banker says "I'll loan you the money for a tow."

The pragmatist says, "Let's try and fix it."

The professor says, "I wrote a paper on vehicle problems in

the country a few years ago."

The protestor says, "If we stage a protest in front of the

bus company headquarters this won't happen again."

The preacher says, "Lord deliver us from this calamity."

The right wing idealist says, "We need a banker to loan us

the money to buy a new bus."

The left wing idealist says, "I will not put gas in the bus

because it comes from oil companies."

The left wing demagogue says, "We told you this would happen.

You need to let us redesign this system."

The right wing demagogue says, "We need more efficiency (less

compassion) in the current system."

The Hollywood producer thinks of a storyline while adjusting

the dual thermostat in his Bentley.

The rich man says, "Driver can you get around that bus?"

The super rich man says, "Look at all that traffic down


God says, "Man! When will you ever learn."

El Viejo's picture

For more bus stories, read "The Great Divorce" by C. S. Lewis



Thanks for the link EV. I'll check it out.

alien-IQ's picture

Euro Bulls? Do they exists?

Lost Wages's picture

Being short the Euro is the most crowded trade in history, so the Euro Bulls are just waiting for everyone to be wrong. And they will be wrong. Because what will happen in the markets? Whatever will be worst for the most amount of people is what will happen in the markets. The day they steamroll all those Euro shorts and fleece them of their fiat will be a day of sadness for many who underestimate the power of the ruling class.

malikai's picture


The thing about the 'race to debase' is that it doesn't end until the currency system itself ends.

It's an endurance contest, not a sprint.

falak pema's picture

neutered ones; with their corns chiseled down. 

Jason T's picture

Big drop in Euro could send markets in a tizzy .. "liquidate the rotteness out of the system" I say.

Schmuck Raker's picture

Not a problem, Yurop is gonna git fixed again. Ain'tcha heard?...

Eurozone may look to Beijing for funds


"I am confident that the relationship with "traditional and good" Asian customers will continue when the ESM issues bonds," he said[Regling]


Beijing and Brussels may enter into talks over boosting the lending capacity of Europe's permanent bailout fund to 500 billion euros by 2014.[These talks are to occur this week in JAPAN... honest... no, really.]


Senkaku to the rescue! Da - da - daah!

LawsofPhysics's picture

There is no "market".  Stop it already. 

disabledvet's picture

I do agree if the bottom falls out of the euro it's kaput for Wall Street...

zorba THE GREEK's picture

What makes the Euro look stronger than the reality of the situation

in Europe is the fact that it is being compared to the U.S. dollar

which appears to be stronger than the reality of the situation in

the U.S. because it is being compared to the Euro. Hmmmm...

The entire FX market is a classic example of ' A circle jerk'

El Viejo's picture

If everything was based on facts in real-time or with a fairly short lag-time we would all become economists through trial and error. And Darwinians would cheer, but Darwin's world is a world of deceit and thievery too and maybe it is a more interesting place because of it. (as long as you are not the prey)

Jlmadyson's picture

Thing is if you really have watched this thing it has had a clear pattern in the last year:

Lower highs and lower lows.

They cannot keep the thing up.

We all know where this is headed.

mirac's picture

Okay guys are messing with my head.  There's three!

Dr. Engali's picture

No there isn't there's only two charts...what are you talking about?

dracos_ghost's picture

Yeah, but only 2 really struck fear. The other one struck a nerve.

Dollar Bill Hiccup's picture

There shalt be no big drops and no liquidation, for He that Has A Beard and He that was a Man of Gold, have declared to all who shall listen: There will be No End to Liquidity,! And they saw it, and it was good.

Jack Sheet's picture

That incisive and brilliant analyst Joan Maudlin has been predicting EUR/USD parity for years.

Quinvarius's picture

I get tired of people pretending there is a currency market that should be traded.  There is only ONE paper currency.  As long as the central bankers cooperate to enforce exchange rates, it is all the same thing.  There is no relative value.  They are all going down together.  The churn is for insider profit.

Jack Sheet's picture

Exactly, with the possible exception of the People's Bank of China. Leading the spiral trajectory down into the sewer appears to be the USD currently, closely followed by the Yuan with the EUR "also ran".

I forgot the /sarc off

falak pema's picture

u will make a lot of eminent Forex traders mad as hell!

They live to ride the USD/EUR, YEN/USD, AUD/USD roller coaster all day long. 

falak pema's picture

Now compare this with this other post here on ZH :

 70 Second Market Outlook – Metals, Dollar, Bonds, Stocks, Energy | ZeroHedge

There are as many views on this on ZH as there are posters; as Zh does not have an editorial line we benefit from all of them! 

Take your pick!

Quinvarius's picture

The EUR/USD is as fixed by central bankers as the Chinese currency is to the USD.  There is no currency market.

falak pema's picture

Here is some good news for Greece. They are going to become the biggest producers of gold in Europe.

Projected production on known resereves, others being prospected, is : 15 tons/yr;  600 million Euros/yr at present prices.

According to Glory Resources, the prospector, Greece has large unexplored potential.