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EUR/USD selling activity overwhelmingly from 4-10:30am EDT - SocGen

FXStreet (Bali) - Sebastien Galy, Senior FX Strategist at Societe Generale, notes that EUR/USD selling activity takes place overwhelmingly between 4am and 10:30am EDT except on Fed decision days.

Key Quotes

"EUR/USD selling activity takes place overwhelmingly between 4am and 10:30am EDT except on Fed decision days. The length of the moves lower, after a data release, is an indirect indication of the pent-up demand to sell EUR/USD. This pressure continues."

"Previous analysis of reserve manager positioning had identified them as having considerable amounts of EUR reserves to sell over the next few months. Quantitative models had shown that EUR/USD should have been much higher as Fed tightening expectations were pared down, also indicating pent-up demand to sell EUR/USD"

"Economic data releases generate virtually all the moderate minute-by-minute shocks, but their impact over the following 10 to 100 minutes is a function of flows amplifying the moves either by adding positions or being sharply squeezed out."

"EUR/USD saw some quite pronounced downward trends as foreign investors were squeezed out of the eurozone by the ECB’s negative interest rate. There is little indication that the pain is over either, judging by the length of downward moves or previous analysis of reserve manager positioning."

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