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Aug 18 - 09:55 AM

EUR: The Top Performer In G10 On Positioning Squeeze; What's Next? - MUFG

By eFXdata  —  Aug 18 - 09:15 AM

MUFG Research discusses the EUR outlook and maintains a bearish bias and a short exposure in spot targeting a move towards 0.99.

"The surge for the US dollar yesterday was across the board within the G10 space – bar one – the euro was close to unchanged, an impressive performance given there is not much on the positive front for the euro-zone at the moment. There was certainly nothing obvious in terms of macro news to explain the specific resilience for the euro. A positioning squeeze supporting euro could though have further to run over the shortterm,"MUFG notes.

"The reality is that the fundamental backdrop for EUR remains negative and short-term spreads dragging EUR/USD lower has further to run. We view there being a much greater risk of the ECB delivering less than the current OIS pricing implies – 115bps compared to the risk of the Fed underdelivering the 125bps priced by year-end," MUFG adds. 

Source:
MUFG Research/Market Commentary

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