Positions in Europe: Short FXE
Off of a bounce towards our immediate term TRADE resistance line of $1.25 Keith shorted the EUR/USD via the etf FXE in the Hedgeye Virtual Portfolio as we’re looking for the cross to test $1.22 on the downside. As we show in the chart below, our TRADE and intermediate term TREND levels of support are both at $1.22. Our call remains that if $1.22 breaks, look out below! We’re not EUR parity folks because we see Eurocrats stepping in to prevent it; however we see a runway of uncertainty until the June 17th Greek elections that should put significant downside risk in play.
This cross remains incredibly shifty driven on the backs of Eurocrat posturing, including on the main topics of Eurobonds, a Pan-European Deposit Guarantee facility, another LTRO, and the reach of the ESM. We’ll be highly sensitive to price as we manage risk around this position.