EUR on brink of historic losing streak
EURUSD has fallen for eight days in a row, and were it to fall again on Thursday, it would be the longest consecutive losing streak in the single currency’s history.
According to HSBC, the last time the euro suffered an eight-day losing streak was in November 2002, when looking at London closing prices from Bloomberg. “If you want to help make history, you should be selling the euro today,” says David Bloom, head of FX research at HSBC.
“EURUSD is succumbing to a new reality, where politics has become the new economics,” he adds, citing the seismic shift in the political scene, with France’s new political complexion, fresh talk of a Greek exit from the euro, and a Spanish bank bailout.
However, despite rising political turmoil, the euro has failed to capitulate. EURUSD has made a steady grind lower, losing 2.1% in eight days and trading around the $1.2950 mark at midday in London on Thursday.
Bloom warns that if you believe history has a tendency to repeat itself, it is worth noting that the 2002 losing streak was reversed in the eight days that followed the steady grind lower.
Bloom is cautious to remind us that the FX market is a fickle place, comparing the renewed euro bearishness to the seemingly misplaced bearishness on the Japanese yen earlier this year. USDJPY climbed through ¥84.00 in March and many thought it would continue to do so, as safe-haven flows receded and renewed emphasis on the Japanese debt situation came back into focus.
Since then, though, the yen has come back into favour, tumbling back below ¥80.00 against the dollar, 5% off its peak.