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Hardy: How to trade EURUSD ahead of QE

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August 26, 2014 angus walker, deficit, deflation, deflation europe, deflation eurozone, ecb, ecb 2 percent inflation, ecb action, ecb angle, ecb annoucnment, ecb balance sheet, ecb borrowing costs, ecb bund futures, ecb council, ecb decision, ecb draghi, ecb euro, ecb failing, ecb governing council, ecb inflation target, ecb mandate, ecb meeting, ecb negative interest rates, ecb news, ecb news conference, ecb paris, ecb policies, ecb policy, ecb president, ecb press conference, ecb rate, ecb rate cut, ecb rate decision, ecb rate decision interest rates, ecb rates, ecb rates decision, ecb stress, ecb stress tests, ecbassets, equities, eur, euro, euro dollar, europa, europe, european central bank, eurozone, eurusd, eyur, fed, fiscal policy, fores, forex, forex 2014, forex 2014 outlook, forex buying, forex eurusd, forex idea, forex market, forex market overview, forex markets, forex saxo bank, forex trade idea, forex trading, forex trading 2014, forextrading, fx, fx award, fx changes, fx crosses, fx dealing, fx eurgbp, fx eurjpy, fx exchange, fx forex, fx gbpusd, fx interbank markets, fx investing, fx market, fx markets, fx options, fx pound, fx regulation, fx saxo bank, fx spot, fx sterling dollar, fx strategy, fx trade, fx trade idea, fx traders, fx trades, fx trading, fx tradinging, fx trends, fx volatility, fx volatitily, fxallocationmodel, fxfx, fxmarkets, fxmonthly, fxoptions, fxspot, fxtrade, john hardy, mario draghi, qe, qe taper, qe tapering, qe what next, qe2, qe3, qeqe, saxo tv, tradingfloor.com
We'll get the latest Eurozone inflation data this week and it's likely to be another signpost pointing towards deflation. During his speech in Jackson Hole, ECB President Mario Draghi didn't give us any firm timescale for QE, but many analysts believe we can't be far off seeing the ECB pressing the QE button. Saxo Bank's Head of FX Strategy John Hardy assesses possible trading positions and says that he believes Mario Draghi's comments on the importance of fiscal policy were worth noting, suggesting that if QE is brought in it would be "only if it brings liquidity, keeps everything functioning and liquid, but not in the massive style we've seen from the Bank of Japan and the US. I think this whole fiscal issue is very interesting going forward.".         

John looks at EURUSD trading strategies, including his own: "A good way to trade is short options, short dated options for a couple of weeks with strike prices not terribly far. We still have very low volatility so options and volatility still relatively cheap. Spot traders, longer term positions, I would remain short but I think we have to have some caution for the potential two way movement again for the next bigger down leg unfolds towards 128 eventually....On Monday I took profit on Eurodollar around 132 on a short position and established closer to 133. I think taking profit says a lot and it feels like we've reached a milestone technically to the downside, a gap opening on a Monday. It just feels like that maybe the market was reaching a bottom. Go a bit lower mid term but I feel the risks are two way and I will be looking to sell EURUSD in general. But I will also be looking for any inputs for example, Thursday and Friday we have some very important inflation data in Europe - we have the German august CPI estimate on Thursday and the Eurozone on Friday."