Regime Change
McRib shower gel.
Only in Germany.
highlights
Buy EURUSD on strong CPI
Current Views
Buy EURUSD @ 1.1051
Stop loss 1.0874
Long 05JUN USDCNH 7.40/7.60 call spread
29bps off 7.2955 spot
Long GCM5 @ 3036
Stop loss 2964
Take profit 3194
Regime change for USD
The USD can’t rally on a 12% jump in the NASDAQ. I think we are entering a pure sell USD regime where we will see a high-Sharpe rip to 1.1500 in EURUSD. As such, I like buying EURUSD on a strong CPI today. Rate differentials are losing their sway over the USD for the first time in my life.
Buy EURUSD at 1.1051 with a stop at 1.0874. That stop loss is below all the moving averages and the cloud. A strong CPI will lead to higher yields, which isn’t really all that USD bullish anymore. Trump blinked on higher yields, but that doesn’t mean 10-year yields can’t retest 4.50% while the USD sells off in tandem.
Final Thoughts
Policy uncertainty and stagflation risks have not gone away. The take profit is getting close-ish in gold.
Have a funny-smelling day.
