Take profit on all positions! ~ Euro strategy for November 2 ~

◎ Strategy and Holding Positions

Euro selling bias (watching for now)

We have fully closed the Short position on EUR/USD.

The bearish bias on the euro has not changed.

However, the selling positions had accumulated, leading to a corrective rebound.

The dollar, which had been the counter currency, changed its trend and turned into a dollar sell-off.

From the two points abovewe have taken profit for now, fully closed.

EUR/USD Timeframe Chart

EUR/USD Daily Chart

Looking at the daily chart, it was testing the previous low of 1.1300, but rebounded and could not break lower.

◎ Outlook from here

1)Back to a range-bound market within the last six months

2)Range within one notch below the above range

3)Some corrective move first, then another test of the lower levels

4)Form a double bottom and enter an uptrend

I considered this in the EUR/USD chart, but please view it as an euro strategy.

Fundamentally, buying the euro is not feasible. Therefore, the above4) scenario is hard to envision. However, due to dollar conditions,scenarios 1) and 2) are possible. If the dollar strengthens after the U.S.–China midterm elections,scenario 3) becomes more likely.

When is the focal point?

The euro’s point of focus is around the deadline for Italy’s budget revision, scheduled for around November 13. Italy’s response to the budget revision and whether they submit a revised plan is being watched.

As for the U.S. dollar,the midterm elections are scheduled for next week. Voting on the 5th is planned. In Japan time, it’s likely to be early morning on the 6th. The House election is expected to be tight, and it may take time to get a definitive result. Depending on the outcome, some banks are forecasting a mini-Trump rally (surge in U.S. stocks, Japanese stocks, and USD/JPY) similar to the post-Trump election rally.

We are approaching events. We will observe carefully and think through our euro strategy.