• FxWirePro: speculative positions vs. Euro performance

    Source: FxWire Pro - Commentary / 07 Jun 2017 06:13:03   America/New_York

    The euro has been one of the top performers in 2017 against the green buck. This year, it has increased almost 7 percent against the dollar so far. While the winning of Emmanuel Macron beating Marine Le Pen in the first round of the French election has been the major fundamental factor driving the latest leg of gain against the dollar, the speculators have been cutting their short positions for quite some time now. Since the election of Donald Trump in last November, speculators reduced their short positions in the single currency from -137.4K contracts in November to just -58.2K contracts before the French election. Despite this decrease in short positions, the euro was dogged by French election uncertainties and the exchange rate was hovering below 1.06 against the dollar.

    Since the French election, the euro rose from 1.06 against the dollar to 1.127 against the dollar as of today, while speculators turned bullish on the euro. The net speculative positions rose from -58.2K before the election to +72.9K as of last week. Speculators have now increased long positions for a fourth consecutive week.

    Several investment banks like JPMorgan, UBS have also revised their forecast for the euro to as high as 1.18 against the dollar. While we have not yet scrapped our long-term parity call, we have forecasted upside for the euro in the short term towards 1.16 against the dollar.

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