MUFG Research on EUR positioning.

"The recent unfavourable combination of higher energy prices and government borrowing costs particularly in France has reinforced euro selling pressure. The release of the latest IMM positioning report at the end of last week revealed leveraged funds are heavily short the euro," MUFG notes.

"Short euro positions have increased sharply since mid-September and have hit their highest level since the start of the COVID shock in early 2020. It leaves the euro vulnerable to a short squeeze in the near-term if the investor concerns over the scale of the energy shock continue to fade," MUFG adds,

MUFG targes EUR/USD at 1.12 by year-end.