Euro bounces on hawkish Bundesbank President Joachim Nagel
#EURUSD +1.6% to $1.0198 highest since March 2022
#EURGBP broke key downtrend line highest since February 2021 at 87.22 pence, triggering stop losses
Investors have only been this short the common currency five times in the last two decades, according to custody data from Bank of New York Mellon. Still, while this reflects the gloomy outlook, it’s also making investors wary of adding to these positions.
“To justify clients adding to these shorts, we have to say the euro is facing existential issues or the financial system is facing systemic risks, neither of which is a reasonable assessment of the Eurozone’s current predicament” said Geoffrey Yu, a senior strategist at the bank. “The burden of adjustment is clearly towards taking off short euro positions.”