EUR/USD tested the upside with a move towards 1.09 but then retreated. What’s next?
Here is their view, courtesy of eFXnews:
Bank of America Merrill Lynch Research notes that the EUR positioning looking stretched and close to max long relative to the past year.
Based on its latest analysis for flows and positioning data, BofAML notes that the positive EUR trend continued with hedge funds, who have been EUR buyers for the past four weeks, joined by a second week of real money buying, and this has been reinforced by CFTC data showing significant short covering in EUR/USD last week.
“We remain concerned on EUR in the near-term as French elections grow closer, particularly given current positioning, even as we maintain a medium-term positive EUR bias,” BofAML argues.
On the USD front, BofAML’s analysis shows that USD positioning is broadly neutral, noticing that investors will likely be looking for a trigger to re-engage in the USD.
“USD hedge fund positions continue to converge towards real-money, with both client types selling USD again last week,” BofAML notes.
EUR/USD is trading circa 1.0806 and USD/JPY is trading circa 111 as of writing.
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