EUR/USD adds 160 pips since the start of US trading
The euro is up more than 2.5 cents higher on the day as competing proposals on a Greek deal from Tsipras and European creditors lend an air of optimism that a deal is close.
I wrote about the game plan for a deal yesterday and although it isn't confirmed, the market is acting like it is: "Expect a relief rally in the euro, no matter what. It could extend 200-300 pips tomorrow as a squeeze takes place."
The magnitude of the move is out-of-line with the moderately positive news but that's the nature of squeezes in crowded trades. EUR/USD is severely tilted towards shorts and they are covering en masse. It's spilled over to other pairs and begun to feed on itself as stops are tripped in JPY, GBP and (especially) the commodity currencies.
Ultimately, this will prove to be a dollar buying opportunity but don't try to be a hero and pick the euro top because this is getting ugly.
