Euro vs the Dollar: The story remains the same
George Kessarios
Chief Economist & Fund Manager
Analyst Insights, Tuesday, 28th of September, 2020
The recent rally of the EURUSD pair from 1.08 to 1.20 was the biggest in over a decade. Usually, when any currency has such a run, it is for a reason. Also, it’s natural that after such a run, any pair will give some back. But the question is where the pair is going and not where it’s been.
We have been following very closely Fed swap liquidity for a while. If we look at the current figures, we see that swap liquidity has been unwinding and currently stands at around $32 billion. In other words, the need for dollars from central banks around the world is almost non-existent at the current time.
Another piece of information that might provide insight into where the pair is going is COT data. The weekly Commitments of Traders from the Commodity Futures Trading Commission.
Please note that as of the latest data last Friday, Net speculative long Euro positions are still the highest they have been in over a decade.
The bottom line is that nothing much has changed in my stance on the Euro. Overall, I still favour it vs the dollar. However also please note the trend is your friend, and in this market, things can change in the blink of an eye.
Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Exclusive Capital communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.