BUZZ-COMMENT-Further EUR/USD elastic's stretched, the more it will sting
Aug 24 (Reuters) - Currency traders have thrown a record amount of money at one EUR/USD bet and they'll probably be encouraged to throw even more. The further they stretch themselves, the greater the snapback will be. It's a question of when there's a pullback, not if there's one .
Traders have turned a blind eye to the crisis and have gambled on stimulus, driving commodities and stocks higher and fuelling this huge bet.
There was very little will to pare longs when EUR/USD almost touched 1.2000. The subsequent record peak for U.S. stocks will support risk appetite encouraging traders to gamble. But there is cause for caution
EUR/USD's rally has slowed markedly. A new trend high was attained in August, but it took weeks to achieve it. It will take a drop to 1.1458 to fulfil the minimum requirement for a technical correction of this year's rise. It's a good time to hedge for that eventuality
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(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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