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Article / 12 August 2014 at 12:53 GMT

Macro Digest: It's time to get long in EURUSD

Chief Economist & CIO / Saxo Bank
Denmark

By Steen Jakobsen


Our JABA model sees broad-based and significant weakness in the US dollar through mid-Q3 into Q1-2015. I’m already short USDJPY (from the present level) and am now adding long EURUSD.

I'm buying EURUSD here - for a couple of reasons:

#1: Positioning - see graph below
#2: My short-term turned up...
#3: JABA model sees clear weakness in US dollar mid-Q3 into Q1-2015

Spot cash: 1.3344
Stop: 1.3270 offered

positioning

JABA

 

 twi

 

 

 

 

 

 

 

 

 

 -- Edited by Clare MacCarthy

 

Steen Jakobsen is chief economist of Saxo Bank

 

5y
Elianto Elianto
Hallo Steen... We have a time horizon and a probable target for this trade? TKS!
5y
Steen Jakobsen Steen Jakobsen
Q! 2015 - 1.40+ EURUSD
5y
ssivis ssivis
It s really brave "call" Mr.Steen :-), hope this JABA model works like Saxo's old Turtle model
5y
Juhani Huopainen Juhani Huopainen
The recent fall in EURUSD has been mostly because of higher interest rate expectations in US, and secondly the European Central Bank's measures, esp. TLTRO, introduced at the June meeting. With Asia relatively slow, Europe very slow and geopolitical risks, the case for higher rates in US is not that certain. It is also uncertain how effective a monetary boost will the TLTRO be. The inflation breakevens suggest there will be no inflation in Europe, which implies that the TLTRO is expected to fail on that front. Ukrainian crisis and the sanctions against Russia should also be temporary, and a relief rally in EURUSD would be quite plausible. For more on breakevens, see See Max McKegg (https://www.tradingfloor.com/posts/break-even-rates-for-bonds-weigh-on-eur-1313886) and me (https://www.tradingfloor.com/posts/ecb-preview-how-expectations-lead-to-possible-surprises-1288656)
5y
J R J R
Hi Steen. Is this still on, or would it be better to get out of the trade at a bounce back?
5y
Steen Jakobsen Steen Jakobsen
It's still on - I remain with the stop @ 1.3270 offered......
5y
bubffm bubffm
so I guess you've been nocked out by now...

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