DailyFX Tips & Picks: Analyst’s pick
CURRENCY STRATEGIST
CHRIS VECCHIO
My pick: Long euro-dollar from $1.3825, long euro-yen from ¥141.50
Expertise: Fundamental and technical analysis with risk management
Average time frame of trades: A few hours to a few weeks
The long euro-yen and euro-dollar trades we positioned for last week were triggered on the ECB rate decision and, barring a setback in economic data, the ECB has opened the door for further euro gains. It does not want to inject more liquidity into the system just to boost inflation. Apprehension about easing more during the stress tests of Eurozone banks comes in the context of recent data: inflation is ticking back up, the PMI surveys have improved, and sovereign yields are low. “Why now?” could be a damaging question to raise in investors’ minds before the test results in November 2014, creating unnecessary confusion during a necessary era of deleveraging.