Focus FX

15 Iunie 2010

RAIFFEISEN BANK S.A.

 

EUR/USD: 1.219 - 1.25

In light of the recently extremely negative market sentiment on the euro, it obviously did not take much to trigger a countermove. Regardless of whether it was the positive results of the bond auctions by countries such as Spain and Italy last week (Italy, for example, had no problem issuing a EUR 7 bn, 5-year bond on Friday) or it was the general improvement in risk appetite in recent days (which over the short term usually buoys EUR/USD, along with the equity markets), all in all, EUR/USD was able to break through the resistance at 1.215 on Monday morning and posted more strong gains during the course of the day. Having pointed out this development back on Friday in our Market Outlook, we took advantage of the break-through on Monday morning to issue a shortterm speculative buy recommendation (Trading Idea) in our daily commentary, described last Tuesday as our short-term strategy. We now stick with this recommendation: Buy EUR/USD, opened at 1.218, with a target at 1.25, and a stop at 1.209. Although some economic data will be published this week, the main factor behind this development is the short-term performance of "risky assets": if the rebound in these assets continues in the coming days and weeks, then there are good chances that 1.25 will be quickly reached. Are even higher levels possible thereafter? Certainly could be. But we would view levels around 1.30 (if they are even reached at all) as a good opportunity to lower longer-term EUR exposure and to build up USD exposure, because this rebound does not change our longer-term pessimistic outlook on EUR.

* under revision

Source: Thomson Reuters. Raiffeisen RESEARCH

 

Trading Ideas

Note: This list contains only the strongest trading ideas for the markets that we cover. Therefore not every market forecast that implies a buy recommendation is also listed as a trading idea! Trading ideas may also differ from our quarterly forecasts. as the time horizon can be different. The time horizon of the trade is at least two weeks but not more than 3 months.

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