Photo: Markusram on flickr
Earlier this morning the Euro failed to retake $1.24, now it’s broken through $1.23.Morgan Stanley perhaps took some profits too soon, but they’re still shorting the euro:
MS’s Sophia Drossos:
We have decided to take partial profit on the core short EUR/USD position in our model portfolio, paring down the position to 15% from a 25% allocation and tightening our trailing stop-loss to 1.34. This trade was initiated originally on December 17, at an average entry level of 1.4085, and we are exiting at 1.2365, locking in a gain of 12.6%. Year-to-date, our model portfolio has generated an unlevered return of 4.81%, with the short EUR/USD position accounting for a large portion of this performance.
While we retain a negative medium-term view on EUR/USD, we believe that short positioning and bearish sentiment have reached extreme levels, raising the potential for a bounce.
That bounce they were worrying about? Looks dead as of this afternoon.
(Via Morgan Stanley, Take partial profit on EUR/USD short, Sophia Drossos, 18 May 2010)