Facts:
- The EURUSD pair has completed a 1:1 correction from the declines initiated in July 2023
- The change in the narrative of ECB bankers, together with the current valuation of swaps regarding future cuts in the Eurozone, indicate a possible premium for a corrective move in the pair
Trade: long pending position with activation limit
TP: 1.07320
SL: 1.04140
Activation price (limit buy): 1.05200
Justification:
Recently, the EURUSD pair has been subject to continuous downward pressure, which confirmed the 1:1 structure from the markdowns observed last year. However, the strength of the bears has temporarily decreased, which, together with the comments of ECB bankers about the small space for further interest rate cuts in the Eurozone, creates a basis for a technical rebound in the pair. What’s more, swaps are currently pricing in a whopping 115% for a 25bp cut in December, which seems like a lot considering the current scale of the euro sell-off against the USD. With these conclusions in mind, we recommend taking a long position on the pair with a pending order at 1.05200 and the Take Profit and Stop Loss prices shown above. We recommend investors exercise extreme caution given the recent spike in volatility on the pair.
