Just catching up on interbank research after a 2 week break and the following factors are being consistently reported:
Prime Brokers are reporting heavy speculative short positions amongst professional players, especially through the options market;
Overall short positioning in the spot market is at significant levels;
Net Fixed Income flows have been very EUR-negative and that’s likely to remain the case;
Reserve manager currency allocations seem to be signalling a shift away from the EUR.
The latter two can lead to very heavy flows so selling rallies is still the obvious play in my view.
The crosses will be less volatile than EUR/USD, with EUR/CAD and EUR/NZD offering some decent longer-term trade set-ups.
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