EUR: Heavy sales seen from asset managers

In January and February we saw a big rally in the EUR crosses as asset managers bought back into high-yielding peripheral EZ assets in the hope that much of the EZ crisis was behind us. This move is now being sharply reversed and it could spell big trouble for the EUR.

• One of the big Swiss banks reported heavy interest from asset managers to sell EUR/CHF.
• EUR/JPY fell sharply again although much of this can also be attributed to very heavy USD/JPY sales by big hedge funds, booking profits after a big move.
• EUR/GBP also fell again but as with EUR/JPY, there are other factors at play in a market already very short of sterling.
• EUR/USD broke below important technical support (see members) at 1.2870 but the failure to close below might lessen the bear’s enthusiasm. I remain bearish for a move to 1.2680.