Markets still have faith in the ECB
The 40-day rolling correlation between the EUR/USD and Spanish/ German 10-year yield spread advances to 40%; markets still have faith in the ECB. If the fragmentation in the Euro-zone declines, EUR/USD has further room to weaken. This being said, the ECB keeps in hand a last, yet powerful tool – the QE, to be activated if needed. We keep our bearish view in EUR and look to sell the rallies to strengthen our short position.
Read the full report: FX Research