FX Convictions – Change in stop loss EUR/USD

by: Georgette Boele

DISCLAIMER: This report has not been prepared in accordance with the legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead. This report is marketing communication and not investment research and is intended for professional and eligible clients only.

In this publication: We lower our stop loss in EUR/USD from 1.09 to 1.0675, which is roughly the break-even level of this recommendation. We expect EUR/USD to break parity and to reach 0.95 over the next 6 months.

161219-Change-stop-loss-EURUSD.pdf (176 KB)

Change in stop loss EUR/USD

The more hawkish than expected FOMC communication last week has resulted in a restart of the rally in the US dollar. EUR/USD has broken below last year’s lows and made a new 14-year low of 1.0367 on 15 December 2016. Since then currency markets have calmed down somewhat.

On 2 December 2016, we recommended to open short euro versus US dollar. This recommendation has performed well. At the time of writing the total return on this recommendation is 1.9%. Going forward we expect the EUR to weaken further versus the US dollar driven by eurozone political uncertainty and monetary policy divergence across the Atlantic.  We expect EUR/USD to break below parity and to reach 0.95 over the next 6 months. However, we also have as a policy that we should not loose on a recommendation if there has been a solid profit. Therefore, we move down our stop loss from 1.09 to 1.0675, which is just above previous intraday peaks and roughly at the break-even level.