Bank of America Global Research discusses EUR positioning outlook.

"The notable outperformance of EUR post-CPI reinforced the perception that EUR shorts are exceptionally crowded. While we agree the hedge fund/CTA community is heavily short EUR, broader data is less conclusive. Our asset manager survey shows the biggest reduction in EUR FX exposure on record, but shorts are still within the '22/'24 levels, let alone the depths of the 2010s peripheral crisis," BofA notes.

"Up/down volatility measures imply pockets of crowded EUR shorts (vs. JPY & AUD) but not more broadly. Ultimately, the direction of OAT-Bund spreads remains paramount for EUR - a 100-150bp range (our base case) implies a floor for EUR, especially if no Moody's downgrade next week. That said, our France fieldtrip this week did little to assuage investor concerns," BofA adds.