DOWNPLAY - It would be hard to rule out the possibility for deeper setbacks in the Euro at this point, with the market right back down towards the 2018 low after looking like it could be on its way to recovery. It's also hard to see the fundamental case for the Euro right now given all of the things stacked up against it at the moment. We've got less aggressive US protectionism, favorable US Dollar yield differentials, troubles in the German government and a flight to safety bid. All of these are supportive of the US Dollar and would suggest that we could see a much bigger drop in the Euro over the coming days and weeks. And yet, it's never really that simple when it comes to markets. What you see isn't even close to what you get and in this case, I think we are really staring at something like this, with technical studies extended and plenty of the bigger players out there remaining aggressive sellers of the Dollar into rallies. I think it will be important to keep an eye on the 1.1500 barrier to see if the Euro establishes below it. If the Euro closes below 1.1500 on a weekly basis, it could mean that we really do see that downside acceleration. But if the Euro can't close below 1.1500 on a weekly basis, you might be surprised to start hearing about the many fundamental catalysts that emerge out of nowhere in favor of the Euro. That's just how it goes with markets.
POSITIONS - Now as you all know, I don't have any exposure to the Euro right now after stepping aside at cost the other day. Right now, my exposure is long Cable and long GOLD. As a reminder, both of these positions were taken with a bigger picture view in mind and both positions require a lot of patience to see them through. The Pound has taken a beating in recent weeks and hasn't been able to come up for much air. We had seen a more hawkish than expected BOE decision inspire a mild recovery, but since then, it's been all about more worry over Brexit and some dovish leaning comments from an incoming voting member at the BOE. But again, just as with the Euro, while it would be hard to see the Pound avoid extending declines on Thursday, it would also be hard to see a scenario where all of those negatives don't quickly disappear, leaving the market back at it, buying the Pound aggressively into this major collapse off the April high. The US government has been very committed to its protectionist agenda and I wouldn't put too much stock in Wednesday's headlines of a less aggressive US campaign on the global trade front. If we've learned anything about politics over the past several months, it's that things can change very quickly. As far as GOLD goes, all of the writing is on the wall and I don't think we should be waiting too long before the yellow metal starts racing higher again.