Short EUR/USD with a target of 1.1430 and a S/L at 1.1940
The trade recommendation comes via Nordea markets to open the new week. Citing:
- The withdrawal of USD liquidity (even if it has clearly abated in recent weeks) is a reason to expect EUR/USD to retrace from current levels as the hot money long EUR vs. USD positioning is already stretched at 21.1% of net open interest.
- for now we lean short in the pair due to USD liquidity, a stretched long in hot money positioning and the smell of roasted Turkey
(Turkey reference is to a weaker TRY)
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Nordea have not given up on the euro, saying "EUR/USD to break materially higher over the medium-term". The short above is for the shorter term.
I would be a little wary of placing a lot of emphasis on open interest right now. The tsunami of liquidity released to battle the COVID-19 economic impact has meant some has found a home in financial market speculation.
