The Euro continues to surge against the US Dollar (ticker: USDOLLAR) as it currently trades a whopping 1000+ pips off of its July lows and less than 400 pips short of year-to-date highs. But how high can it go, and is now a good time to sell?
Cons against selling Euro against the US Dollar
Fundamental developments prop up Euro as Spain nears reform package
US Federal Reserve KO’s the Dollar as it announces open-ended Quantitative Easing
Pros in favor of selling Euro against the US Dollar:
The 1.3100 – 1.3145 range represents HUGE resistance on Euro/US Dollar
Despite announcing indefinite QE, Fed raises forecasts for US Growth
A short position is risky at these levels, but potential reward against risk is significant. Ultimately we may need to see signs of potential reversal before advocating short positions at these levels. Given the speed at which the Euro has surged, there’s arguably not enough evidence that now is indeed the best moment to sell.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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