Are EUR Bulls Prepared For The FOMC Decision?

So far there have been no surprises – consolidation is the name of the game this morning before 'helicopter' Ben gets to his press conference. The G10 major currencies have essentially traded sideways ahead of today's FOMC economic projections, statement and rate announcements. However, for the EUR it has been a far different story up until this point. It seems that the single-currency bulls have become somewhat immune to negative EUR factors, allowing the currency to bid right up until the Fed decision. If the Fed happens to ramp up 'taper' talk this afternoon, then these EUR bulls may be in for some pain. A deteriorating dollar yield advantage has been a major driver of this latest EUR rally.

Although core-EUR outright short positions were never really that large, net dollar long positions across the G10 stratosphere grew to historic records. Something had to give ahead of today's potential watershed central bank meeting – hence, the mass position liquidation that had...