Synopsis:

Barclays' proprietary rebalancing model suggests moderate USD selling into June month-end, though signals for EUR/USD remain weak, implying limited support for a sharp euro rally from rebalancing flows.

Key Points:

• Month-End Outlook:
  Model signals moderate USD selling pressure across most G10 pairs into month-end, though the EUR/USD signal is weak, suggesting only marginal support from flows.

• Quarter-End Insight:
  At the quarter-end, the model shows stronger dollar-selling pressure, again with only a weak EUR/USD signal but a moderate selling signal on USD/JPY.

• Implication for EUR/USD:
  Despite general USD selling pressures, EUR/USD may not benefit meaningfully, reinforcing the theme of euro underperformance relative to other majors.

Conclusion:

While positioning adjustments may pressure the USD modestly, EUR/USD upside from month-end rebalancing flows appears limited. Investors may look to other G10 pairs for clearer USD-selling opportunities.