ECB President Mario Draghi in his last Friday's comments hinted rejection of a rate cut / QE extension in December which would likely have a positive signal for EUR.
With a Fed that will hike key rates in December after all (according to the general view).
We see delta risk reversal for 1 week contracts have shown slight recovery signals but long term (1M-1Y) put contracts of EURUSD are on higher demand.
The BoJ will not extend its QE programme despite the fact that it continues to miss its targets.
The weekly increase of 43,368 net EUR short positions against the USD from -62,566 to -105,934 contracts is the highest since April 2008 (see chart below) and corresponds to a three standard deviation (sigma) move.
A glance at the data series shows these seismic shifts in investor sentiment are extremely rare, but it underscores how aggressively investors responded to the dovish ECB press conference two weeks ago and the serious consideration that has been given to the possibility of another cut in the deposit rate (-0.20%) and an expansion of the existing €60bn/month asset purchase programme at the next meeting in December.
Trade tips:
Draghi's dovish stance prompts us to increase euro shorts; initiate EUR shorts vs. CHF in G10 and vs. RUB and PLN in EM.
The portfolio was already short EUR/SEK via a 2m seagull pre-ECB. Long a 2-month 9.30-9.15 EUR/SEK put spread and short a 2-month 9.70 EUR/SEK call.


FxWirePro:AUD/USD attracts selling interest, could be on verge of a bigger drop
FxWirePro: AUD/USD sustains gains as uptrend remains strong
EURJPY Holiday Lull: Tight Range Above 183 Keeps Bullish Bias Alive – Buy Dips Targeting 186-187
Ethereum Coils in Tight Range: Bullish Signals Emerge – Buy Dips Targeting $3600
FxWirePro: GBP/AUD neutral in the near-term, scope for downward resumption
FxWirePro: GBP/NZD retreats slightly but trend is still bullish
FxWirePro- Major Crypto levels and bias summary
FxWirePro: USD/JPY caught in narrow range, bias bearish
FxWirePro- Major European Indices
FxWirePro: USD/JPY holds narrow range,focus on near-term support
FxWirePro- Major Pair levels and bias summary
NZDJPY Breaks Lower: Bearish Bias Strengthens as Trendline Support Crumbles
GBPJPY Coiled in Tight Range: Bullish Bias Holds Above 210 – Buy Dips Targeting 212 Breakout
FxWirePro- Major Pair levels and bias summary
FxWirePro: USD/CAD trends higher, but faces potential pitfalls
FxWirePro: NZD/USD neutral in the near-term, scope for downward resumption
AUD/JPY Holds Steady with Bullish Undertones: Buy the Dips Targeting 107




