It is no secret that US banks are pushing hard for a big market dump: after all that is the only thing that could unleash QE either in Europe, or far more likely, in the US. Whether that means the Fed will much more aggressively monetize US or, as discussed yesterday European debt, remains unclear, but one thing is certain: US and European banks for the most part loathe the LTRO as it simply delays the day of printing and buys the banks time they don't need and can't afford. Which is why Bank of America, as it is the most exposed to a world without QE, was the first to jump in and demand the market crash itself, by presenting an FX note saying the EURUSD "squeeze has run its course" and is proceeding to sell the EURUSD at 1.3045 with a target of 1.2510. Whether or not the EURUSD gets there is irrelevant. What matters is that, as expected, the push for QE will be renewed with far greater vigor by the very entities that are supposed to benefit from the LTRO as paradoxically the banks now have to scramble to offset the favorable, if very short term, impact from the LTRO because they know it achieves nothing and the only savior is and has always been Ben.

Form Bank of America's MacNeill Curry:

Sell EURUSD, as the failure of risk assets to hold London AM strength bodes poorly for the US session.

 

We have seen a significant reversal overnight in EURUSD and risk assets generally. The EURUSD failure to attract new buying on the break of 1.3146 and subsequent Bearish Engulfing Candle on intra-day charts leaves a 3 wave, corrective rally off the Dec-14 lows. All this indicates the downtrend is resuming. While we have concerns about positioning and sentiment, the trend trumps all and it is still clearly to the downside. The squeeze has runs its course.

 

Sell EURUSD at market (now 1.3045) risking 1.3255, targeting 1.2510