Italian Elections Could Trigger A Quick Aggressive Unwinding In EUR Long Positions - UBS

Quote of the day:

"Looking into how the EUR has performed over the past few weeks, and you are coming into the thinking of market investors who believed that they shouldn't be worried as risk has been priced out and everything will be fine going forward. And suddenly risk is being priced back. I think one real strong point of complacency the market had over the past few weeks was waiting literally for the last minute to start pricing in political worries and that what caused the recent sell-off in the EUR...The thing that has been driving the EUR higher over the last few weeks has been positioning. People believe that things are getting better willing to put their money back into Italy and back into Spain to capture yields. But suddenly now if politics goes the other way after the Italian elections, then all the faith that has been placed in the periphery of the euro zone will be proven that it has been misplaced and then the EUR positions will be quickly unraveled because ultimately nothing has changed in terms of the fundamentals of the euro zone."

Geoffrey Yu, FX strategist at UBS (Source: CNBC)

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