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Jul 18 - 04:55 AM

EUR/USD - Traders Remain Terribly Positioned

By Jeremy Boulton  —  Jul 18 - 02:40 AM
  • Bets on EUR/USD dropping remain small even though pair has collapsed

  • Traders short equivalent of just $3.1 billion dollars

  • Largest short held throughout Fed's tightening cycle is $3.2 billion

  • Bets materially impacting prior trends $25-30 billion

  • Perhaps economists who remain bullish are influencing traders

  • Bubble chart reveals scarcity option hedging below 0.9900 until end-Dec

  • More bubbles = more expiries. Bigger bubble = bigger expiries

  • EUR/USD has dropped 1.2135-0.9952 since Fed signalled taper Jun 16 2021

  • Fed seen hiking 75bps in Jul, ECB 25bps

  • One-year forward swap has widened 90 pips to 282 pips since taper signal




Source:
Refinitiv IFR Research/Market Commentary

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