EUR rallies: EZ debt markets still the key
The market has been avoiding the EZ debt markets like the plague in recent years but a lot of information from the fixed income market would suggest that this tide is turning. The spot FX market remains committed to a bearish EUR stance but this flies in the face of actual real money flows and hence the short-covering rally once the ECB stayed steady.
I prefer to stay long EUR on the crosses as I’m still not sure what the USD will do in the medium term. EUR/USD had been stuck in range-trading mode for months and it will take a change in trader sentiment to move it onto a higher plane.