Sentiment has been very negative on the Euro — for good reasons! — and the drop quite dramatic, from 1.50 to 1.26 USD. I am happy to take my profits here (closed my options at 1.2660).
Where to from here? Here's what I think about doing:
- If the Euro keeps on dropping, well, I won't short it at these levels, and I will actually consider going long the Euro.
- If the Euro stabilises at these levels, I will also consider shortly to go long, with tight stops and short term views.
- In any case, I will now consider deploying the capital freed against a short the AUD vs the USD. If anything serious and major happens, the risk-off trade should make a major blow the bubble currency of the bubble economy that is Australia.