January 26th, 2:07 pm by Barbara Zigah
(eToro Blog) Following the Federal Reserve’s announcement yesterday, the Euro again rallied against the U.S. Dollar, and is now trading higher today at 1.3156. On the OpenBook, traders who had expected the Euro to pullback are rethinking their positions. Trader psee1961 has closed out several longs (and a single short) over the past day, with a range of profits from as little as 1% (the short) to a high of 46%, with an average 26% return on the last six longs.
Guru pyruss has been able to notch out some small consistent gains, trading on both sides of the EUR/USD pair, but remains overall bearish in the short-term. According to comments he wrote on his wall in response to a question on a “flawed approach,” he says that he will “move to cautious bull side, until we touch or break 1.32.” Further, guru pyruss sees strong resistance ahead “from 13245 up to 13200.”
It’s surely prudent to move cautiously, regardless, with the volatile Euro. Sources close to officials at the European Central Bank have now quashed earlier speculation and said that the bank has ruled out the possibility of accepting voluntary losses as one of Greece’s many bondholders, but the debate rages on as to how it would handle a forced loss or even if they have any legal options available to avoid one. However, the head of the IMF, Christine Lagarde, has said that the ECB and Greece’s other public creditors may have no choice but to accept the loss Greece cannot brings its debt to a sustainable level even after negotiations with private bondholders.
As a matter of course, since May 2010, the ECB has been regularly buying sovereign debt, and analysts estimate that the ECB holds some €40 to €45 billion worth, with Greek bonds the majority of their holdings. Analysts speculate that the ECB may have paid as much as 30% below their face value for the Greek bonds.
Overall, the sentiment on OpenBook remains generally bearish for the EUR/USD pair. OpenBook guru NMarijus has closed out a handful of shorts on the EUR/USD pair to small gains over the past day, but two other short sells that he opened yesterday ahead of the Fed decision are solidly in the red and accompany the other pair of shorts; his stops are set on all for the 1.3315 to 1.3345.
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