...and fears of a bubble in bonds, as yields extend into negative territory further out on the maturity spectrum...
...have raised questions regarding the possibility that the ECB could decide to temper its planned bond purchases. If the relationships between asset levels and exchange rates holds, it would appear that the decline in the euro may be a bit overdone:
In addition, as we pointed out earlier this week, the number of contracts long the dollar versus the euro is at a record high-- from which a reversal would seem to suggest the potential for a stronger euro:
