Here's where SocGen will be selling the euro
SocGen target 1.1800 to re-enter shorts
SocGen analyst Kit Jukes says the short trade will become attractive around the 1.1800 level.
He says that remaining EUR shorts will be flushed out by the time we get there and that a move closer towards 1.20 won't adequately reflect the impact of monetary policy divergence between Europe and the US.
I can see why the 1.1800 level is attractive as it's the 38.2 fib of the 2014 drop. I also agree that there's going to be further short covering if the 1.1500 level gets broken properly.
EURUSD weekly chart
However, there's going to be plenty of bigger longer-term shorts sitting on positions from the Draghi drop from 1.40 who will be keeping an eye on the 38.2 and 50.0 fibs for signs that the real trend has changed.
If we do see a proper break of 1.1500 then it could be one to jump on, especially if we get confirmation. In the first instance, be wary if we just see a quick blow through to somewhere like 1.1530, which quickly dissipates and falls back below. If we then see support holding around 1.1470/80, then it breaks higher a second time, that's probably the one to go with.
Conversely, if we pop through the drop back below and see 1.1500 become resistance again, it's likely we'll be heading back lower.