EUR crosses getting hammered amid big flows in early European trade

EUR/JPY and EUR/GBP are leading the way today, following on from big EUR/AUD sales yesterday which came from the same macro funds. I’m afraid I don’t know what is exactly behind this selling but interestingly it seems to be mostly in the crosses rather than in EUR/USD itself.

I’m guessing that they are bailing out of existing long positions rather than establishing new ones, as we know for certain that most of the big macros were very long EUR/JPY.

FOREX-Dollar Rises Versus Yen in End-Quarter Trade

LONDON, June 28 (Reuters) - The dollar rose against the yen on Friday and inched lower against the euro in choppy trade as investors squared positions on the last trading day of the quarter. The U.S. currency's recent rise was tempered by Federal Reserve officials, who on Thursday sought to play down expectations that the central bank will soon cut back its stimulus programme. "There should be some rebalancing flows going through," said Richard Falkenhall, FX strategist at SEB Merchant Banking. "...Markets have reacted (to signals the Fed will scale back stimulus) like the Fed is going to tighten monetary policy and that is not the case." The dollar index, which tracks its performance against a basket of major currencies, was up 0.1 percent at 82.990, not far from Thursday's 83.171, a peak last reached on June 3. The index was on track for its second straight week of gains. Against the yen, the dollar was up 0.5 percent at 98.92 yen, having hit 99.03 yen earlier, its highest since June 11. A large option expiry was reported at 98.50 yen and resistance was cited at the 55-day moving average of 99.259 yen. Some strategists said yield differentials still favoured the dollar, compared to the yen in particular. "U.S. bond yields have come off a little bit in the last couple of days, but I think the environment we're in is still dollar-positive," said Mitul Kotecha, the global head of foreign-exchange strategy at Credit Agricole in Hong Kong. The 10-year Treasury yield was not far from Monday's peak of 2.66 percent which was its highest since August 2011, while 10-year Japanese yields traded in a 0.8-0.9 percent range. The euro was up 0.1 percent at $1.3046, inching away from Wednesday's four-week trough around $1.29845. Analysts said growing worries about the euro zone's faltering economy, in contrast to the relative optimism around the U.S. economy, could hurt the single currency. While Fed Chairman Ben Bernanke last week laid out a roadmap for scaling back its asset-buying stimulus programme if the economy continued to improve, European Central Bank President Mario Draghi flagged downside risks to growth and said the ECB was nowhere near exiting its accommodative monetary policy. Markets will focus on U.S. data later in the day including Midwest business activity and consumer sentiment for June.