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Adding to bearish USD positioning by buying EURUSD - TDS

FXStreet (Bali) - Shaun Osborne, Chief FX Strategist at TDS, has built a case to play longs in the EUR/USD short term, noting that price action is potentially bullish from a technical perspective.

Key Quotes

"USD rally may be running out of momentum and that a correction lower may follow. Short-term interest rate spreads have moved back in EURUSD's favour over the past couple of weeks, as has the relative difference between Eurozone and US data surprises."

"Short-term rate spreads suggest EURUSD fair value is close to 1.30 right now. The fundamental drivers of the recent EUR decline—diverging data trends and yield differentials—are now moving the other way. EURUSD perhaps has to catch up."

"We think price action in EURUSD is potentially bullish from a technical perspective and we want to add to our bearish USD positioning by buying EURUSD at current spot, 1.2674, risking 1.2560 and targeting 1.3135 (50% retracement of the July/September sell off)."

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