LONG EUR POSITIONS AT THE HIGHEST IN EIGHT YEARS

Investors are long EURO. Very Long ! The most they have ever been since 2008 and that usually is not a good recipe for further advances.

Option markets recorded the strongest bullish sentiment on the EUR since 2009 and the premium to buy calls has reached a record high. Investors are betting that the ECB will announce a change in its monetary policy on Oct 26th and will start reducing the size of its bond buying program ahead of time.

But with investors being in a crowded one-way bullish bet on the EUR, the meeting could result on either a BUY ON THE RUMOUR SELL ON THE NEWS, or even worse a massive reversal if expectations are not met.

The Chart below shows that the moving averages have triggered a significant SELL signal , the first one since January 2017.

Don’t pin too much hopes on a continuation of the EUR Rally.

Jacques Mechelany

Jacques Mechelany, the founder of the company, has over 35 years of fund management experience in Europe, the USA and Asia.Jacques Mechelany has a Master in Law and a Bachelor in Economics from the University of Paris (Assas). a Master in Business Administration from l’Institut d’Etudes Politiques de Paris and an Executive Certificate in Public Leadership from Harvard Kennedy School.