2 Weeks in a Row with a Trade Idea for Shorting FXE

09/12/2017 3:03 am EST

Focus: CURRENCIES

Landon Whaley

Editor, Focus Market Trader

Trade idea: This is my second week in a row with a trade idea for shorting FXE, that’s how good I think the opportunity is right now, suggests Landon Whaley of Focus Market Trader.


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Trade Idea: The Guggenheim CurrencyShares Euro Trust (FXE) gained 1.4% in the week ending September 8, and has gained 13.6% for the year!

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According to Bloomberg, Deutsche Bank CEO John Cryan, called for an end to the Eurozone’s easing ways because he is “seeing signs of bubbles” across capital markets. Cryan went on to say, “I welcome the recent announcement by the Federal Reserve and now also from the ECB that they intend to gradually bring their loose monetary policy to an end.”

Well, he got his wish, sort of.

At last Thursday’s meeting, the ECB kept rates unchanged and did not change their policy guidance. However, on Friday, it was revealed that a discussion of various tapering scenarios had taken place during the meeting.

The possibilities discussed by the ECB included: cutting asset purchases to 40B or 20B euros a month with a possible duration extension of six to nine months.


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The euro jackknifed on news of the tapering discussion, even though Draghi didn’t mention it in his prepared remarks.

I remain skeptical the ECB is going to ignore their inflationary problems and step away from the easing button. I continue to see the euro’s strength as an opportunity to get short. That said, if you initiate a trade make sure you keep your risk tight and a hair trigger on the trade.

Trade idea: This is my second week in a row with a trade idea for shorting FXE, that’s how good I think the opportunity is right now. If you followed last week’s trade idea then you initiated at Friday’s closing price of $116.17. I would hold only one trade idea in FXE, so ignore this week’s trade idea and keep your eye on the risk price you set for that trade.

If you’re new to this trade idea then new short positions can be initiated between $114.66 and $117.16. Depending on how much room you want this trade idea to move, use a risk price between $119.01 and $123.36. Once initiated, close all open trade ideas if FXE opens, or closes, above your risk price. If the trade moves in your favor, then you could consider using the area between $113.23 and $110.75 as your initial profit target.

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