Societe Generale Research discusses EUR/USD outlook and see a scope for a move towards 0.96 in 2 months and likes to express this via a put-spread structure.
"EUR/USD is now (below) testing parity for the first time in 20 years. The bearish forces include (1) tail risks surrounding the war in Ukraine, with a risk of gas shortages fuelling recession fears in Europe, and (2) the prospect of ECB paralysis – for more details, see our latest Macro Blog post. What matters most now for price developments is the state of the positioning," SiocGen notes.
"According to the CFTC, the FX market has been mostly long the euro since March 2020, and as of 8 July, the net positioning remained marginally short by historical standards. The FX rate is thus moving faster than the positioning, and so the FX market has lots of room for more shorts," SocGen adds.