The Euro is not weak – even if it looks that way – Commerzbank
|“Economic news from the euro area was not particularly relevant for the EUR/USD exchange rate, Commerzbank’s FX analyst Head of FX and Commodity Research Ulrich Leuchtmann notes.
EUR optimism in EUR/USD long positions may be risky
“I like to look at the performance of a currency against the G10 average. It's a simple measure, but it helps me. Over the course of this month, this concept indicates that there has been no idiosyncratic EUR weakness at all, but that the US dollar has been able to gain quite significantly. The fact that EUR/USD is lower today than at the beginning of the month is purely a USD effect and has nothing to do with any alleged EUR weakness.”
“The euro was even able to gain moderately recently. You just don't see it in EUR/USD because the greenback is rising so spectacularly. Whether last week's eurozone PMIs are a negative surprise or a positive surprise depends on what was expected before the data were published. The fact that the euro was able to gain against the G10 average after the PMIs was an indication that extremely pessimistic economic prospects for the eurozone were circulating among market participants in the run-up to the data, which were not confirmed by the data.”
“In other words, the euro is relatively robust in the face of not-too-bad eurozone news. You just have to be careful. Expressing EUR optimism in EUR/USD long positions may be overly risky due to the USD risks. Other currencies may be more suitable as the short side of a EUR-bullish trade.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.