EURO SHORT - With very little follow on the EURJPY short in early Wednesday trade, I covered for a small profit, and it's a good thing I did. The market was crazy around the NY open, with the US Dollar rallying as if it were ready to make a comeback, before selling off sharply post ECB. Just a big mess of whipsaw price action to make anyone's stomach turn. So what did I do on Wednesday? I stood aside for a short while after getting out of EURJPY, and then when things got wild again, I jumped back in and sold EURUSD on the push above 1.1200 (average cost 1.1235). Yet another super-extended intraday move to sell into. However, with this trade, I am less short-term and have a stronger core view for the market to head lower. The strategy is more of a sell and hold, rather than the short-term stuff I was doing with EURJPY which was sell and protect. Ideally, the Euro stalls out on and remains very well capped below 1.1350 for a resumption of declines back towards the recent 1.0820 area low.
WHAT'S CHANGED? - I don't really see that anything has changed in the big picture since the Euro was trading much lower earlier this week. While it's true there has been a feverish optimism over a possible Greek deal and ECB Draghi has said he has no plans to expand QE, I'm not sure these things really qualify as reasons to fall out of love with the US Dollar, or in love with the Euro for that matter. Even if we do see a Greece deal, it isn't like everything is all fine and dandy. It will be a very difficult road ahead. I had said earlier this week we would see a lot of chop given all the event risk on the calendar, and that's exactly what we're seeing. We haven't really gone anywhere in the grand scheme and are just chopping around. Wednesday's US ADP data was solid, along with the rest of the US data, and now we come into the big one on Friday, in the form of NFPs. I suspect we will continue to see choppy trade ahead of Friday and given where we are trading, this should result in some chop back in the direction of the Dollar.