Sunday, September 18, 2011

EURUSD Opens 100 Pips Lower On Latest Round Of Greek Default Fears and PIMCO: Euro to $1.20 in in Three to Six Months.(EUR/USD)

First up, ZeroHedge:
Same Sunday, Different Day. As the FX market opens, the accrued rumors from this weekend, once again focusing squarely on Greece have come to a fore. The immediate result: a EURUSD which is down 100 pips from the Friday close. Gold and ES opens in 2 hours, Asia in 4, the European bailout rumor mill shortly thereater, the central bank global liquidity pumpathon just after that, and so on. We have seen this all play out before and frankly it is getting boring.

Before moving on to the next link, a reprise of our lodestone for all pronouncements from Goldman or PIMCO:
My usual intro to anything Goldman says about commodities is:
Mother: .....And remember, the Lord loves a working man.
Navin: ........Lord loves a working man.
Father: ......And son, don't never, ever trust whitey.
-The Jerk (1979)
From MarketBeat:
Pimco, one of the world’s biggest asset management firms, is betting that euro could drop to $1.20 over the next three to six months, shrugging off its recent rally.

Pimco’s position would have the dollar rising more than 10% from its current $1.3876 to the euro, which strengthened sharply Thursday on the ECB’s announcement of fresh liquidity measures to contain the euro zone’s debt crisis.

The ECB said it will cooperate with four other central banks including the Federal Reserve to provide banks with dollars over three funding operations. The latest measure came after funding stress continued to flare up in euro zone banks, raising fears the festering debt woes in the region could ignite a new financial crisis.
But the euro zone is confronting a toxic mix–how to put the fiscal houses of debt-ridden countries including Greece in order, while such measures could undermine an already weakening economic growth. A slew of measures–including bailouts for Greece, Ireland and Portugal–over the past year has failed to solve the debt crisis and the euro fell to a seven-month low of $1.3495 earlier this week.

The ECB’s latest move “is just another short-term fix,” said Scott Mather, head of global bond portfolio management at Pimco, in an interview. “The euro’s rally won’t last. The fair value for the euro should be around $1.20.”

The euro last tested $1.20 in June 2010 when the euro zone’s debt crisis started to flare up in Greece....MORE
We did pretty well on that last move, from November 2009's
Everybody's Dissing the Dollar
I don't have anything concrete I can point to but 1.50 EUR/USD almost feels as if someone has drawn a line in the sand. As more and more money piles into the trade without movement past that line you start to lose the mo-mo traders and the psychology can shift fast.

If the buck were to turn and head back to say, 1.20, the results for equities and gold would be painful.
I'm just sayin'...
The next day we repeated the above in "Goldman On The Dollar Carry Trade: "A 20% Reversal In Either 3 Months Or 3 Days"'

On November 25 the Euro hit it's high for 2009 and we posted "Dollar Sliding Into New Trading Range":
From MarketBeat:
The euro hit a fresh high for 2009 at $1.5144 as selloff in the greenback took another big jump in New York afternoon trading....

To June 10 2010's ""Goldman Formally Lowers EURUSD Target From $1.35 To $1.15; Time To Go Long"(GS)":
EUR/USD is currently 1.2118.
We stuck our necks out and posted "Ready for a Positive Euro Surprise?" at 1.1917 on Monday.
Here's our last post on Goldman and the Euro: "Goldman Sachs on EUR/USD: "no freaking clue where the EUR will go next" (GS)", Fittingly enough on April Fools Day....