Nomura likes long exposure in AUD vs EUR (short EUR/AUD), and in GBP vs EUR (short EUR/GBP) as medium-term trades.
"Correlation regime changes come and go: it seems the phase of higher US yields pushing the USD higher is already over...We thought the breakdown of EUR to risk sentiment last week was another warning to expect a further pullback and bought 1.19 puts . We caught the break below 1.20 but missed the bounce back," Nomura notes.
"While we have been caught in what we can only describe as a shortterm positioning washout, it is still the case that our medium-term view of a weaker USD remains firm. Rather than holding long EUR/USD positions right now we prefer long high beta FX longs with long GBP and AUD against EUR as a funder," Nomura adds.