EUR/USD made a very nice rebound, breaking above the wedge and returning to levels last seen before the QE announcement. A correction or a change of course?
The team at BNP Paribas explains why it could be time to sell the rebound:
Here is their view, courtesy of eFXnews:
BNP Paribas entered a fresh short EUR/USD position via filling a limit order at 1.1450. The following is BNPP’s rationale behind this call along with the exact levels of the trade (stops and targets).
“Bearish EURUSD is a core view for us in 2015, but last week we were cautious entering a short position with the pair appearing vulnerable to a squeeze higher,” BNPP argues.
“Going forward we view there to be several key factors leading to a weaker EURUSD. A gradual decline of real yield support, a further building of short EURUSD positions by investors and a deteriorating balance of payments situation all signal weakness for EURUSD going forward,” BNPP argues.
On the technical front, BNPP thinks that the weekly resistance around 1.1490 coincides with a strong four-hour bearish trend line which has been working extremely well since May 2014.
In line with this view, BNPP entered a short EUR/USD from 1.1450 with a stop at 1.1620, and a target at 1.08.
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