EUR/USD is rallying on talk of friction within the ECB as the German’s push for an exit strategy to be put in place, which would presumably push up short-term yields.
Just because you have an exit strategy, it does not have to be deployed.
Case in point: The Federal Reserve has an exit strategy all spell out about how they plan to drain liquidity from the markets when the time comes. They have put in new facilities like triparty reverse repos for just such an eventually.
They’ve had the strategy for probably two years almost three years.
But it sits on a shelf, unused, just like the Defense Department’s plan to invade Canada. Sure, we have one. We just don’t use it.
Buying EUR/USD purely on the idea of an exit strategy is folly.
