A Rally on the EUR is about to start

The Euro has been on a one-way downtrend since May 2014 where it was trading at 1.39xx against the USD all the way down to 1.12xx which it reached as I'm typing this post.

Sentiment has been very negative for a while now:
  • Daily Sentiment Index (DSI) falling to just 6% Euro bulls (source)
  • Daily Sentiment Index (DSI) fell to just 4% EUR bulls (source)
"Everybody" hates the Euro, while on the contrary, everybody loves the US dollar, and that trend has been going for a number of weeks now, so I'm expecting it to reverse very soon.

The biggest catalyst is probably going to be the fact that the ECB had purposefully leaked the number 50 billion of their money printing, currency debasing project, in order to "positively surprise" the market a couple of days later by announcing 60 billion euros being printed every month. 

Now, this "positive surprise" is priced in. Speculators are massively short, as shown on the COT report below.

It makes sense for contrarians to bet against the crowd at this level and expect a bounce.
As usual, I will make an update to this post when I open the position.

[Update: I purchased EURUSD options on Friday when the EURUSD was trading at 1.132x. This should give a limited downside risk, specifically given that I believe the EUR bottomed just after I posted this blog, and in the case of a rally, I would have a very good leverage.]

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