EUR/USD: Crosses and flows suggest more gains likely

It’s pretty hard to be bullish EUR/USD at 1.40 but the current signs suggest to me that there may be some more topside here.

• EUR/CHF and EUR/JPY, at the very least, look like they have stopped falling
• EUR/GBP has made strong gains and isn’t retracing
• Middle Eastern Sovereign names continue to buy dips in reasonably big size
• M&A flows like the AT&T/Deutsche Telekom deal will be EUR positive in the short-run

I still think the best way to trade this pair is to do nothing until you hear that the big Sovereigns are buying, then join them with a fairly tight stops looking for a 100/150 pip rally.