Goldman Closes EURUSD Trade Two Days After Revising Target To 1.40

Goldman FX's latest flip flop comes just two days after the firm raised its target on the EURUSD pair.

On January 13th we recommended going long  EUR/$ based on the notion that markets have been too sceptical about the Eurozone’s willingness to address its sovereign issues. Moreover we remain fundamentally USD bearish and expected monetary policy differentiation to also work in favour of EUR/$ with the Fed likely on hold through end- 2012, while the ECB may tighten much earlier.

Since then a stream of positive news on Eurozone sovereign issues has provided the EUR with sizable support and the recommendation has performed largely as expected. Expectations for monetary policy have also moved in favour of this recommendation.

We raised our target and stop recently in expectations of further potential upside. However, over the last few days a lack of additional catalysts has keept EUR/$ largely range bound and the risk reward more symmetric compared to when we initiated our recommendation. As a result we have decided to lock in the gains and look for better opportunities to express our constructive view on the Eurozone.

We close our long EUR/$ for a gain of approximately 2.7% from the opening level of 1.3280. 

Translation: we are all Cramer now. If Green, we upgrade it. If Red, GTFO.  Now pay us our soft dollars.

It also means Goldman's prop, pardon, flow traders (easy to make that mistake - you see they sit next to each other) are stuck holding a whole lot of USDs.