The Euro nice weather period is running out

Print

Since the beginning of the year, the euro has been one of the stars in the foreign exchange market. Approximately 12% has the Euro gained in value against the US dollar. But now a trend reversal is emerging which could catch investors on the wrong foot. This is shown by the sentix Strategic Bias, which is at a turning point.

The euro surprised most investors this year. At the beginning of the year there was the expectation that Trumps policy agenda would lead to an appreciation of the US dollar. Correspondingly, investors were positioned long US dollars. That went wrong. Well, in September 2017, the situation has changed. The euro has gained strongly and the investors are mainly positioned long in euros. And this to a considerable extent. This could turn out to be a mistake.

sentix Strategic Bias EUR-USD and EUR-USD prices

sentix Strategic Bias EUR-USD and EUR-USD prices

In the meantime, the strategic bias, that is, the investor's basic trust, has turned. This is usually accompanied by a reduc-tion of positions held by investors. The cause for this mood change is likely to be a variety of factors. On the one hand, the FED is becoming increasingly restrictive and puts the interest markets under pressure. On the other hand, Trump now seems to be moving forward about tax cuts. But a German factor should also be important: the weakness of Merkel after the election, the difficulties of a new coalition and plans of French president Macron should not strengthen the confi-dence in the euro. In the past, a Bundestag election often represented a caesura in EUR-USD. This is likely to be the case again in 2017.

Background

The sentix Strategic Bias (investors' six-month market confidence) is conducted on a weekly basis since 2001 as part of the sentix Global Investor Survey. It reflects the strategic view of market participants as well as their fundamental convictions and perceptions of value for a given market. As this indicator represents investors' general willingness to buy or sell it should not be interpreted as a contrarian signal. Rather it is usually leading the market by several weeks.

The latest sentix Global Investor Survey was conducted from 21-September to 23-September-2017. Around 1.000 in-dividual and institutional investors took part in it.

We use cookies to personalize our content, to auto-login to our website and to improve your experience when using it. Cookies used for the essential operation of the site have already been set. To find out more about the cookies we use and how to delete them, see our privacy policy.

I accept cookies from this site.

EU Cookie Directive Module Information