Net short positions in EUR rose to their highest levels since October – Rabobank

Reviewing the latest CFTC data, Rabobank analysts noted that net short positions in the EUR rose to their highest level since October.

Key quotes

"Since then there have been a few moderately better than expected Eurozone PMI data releases which may add a little support and a stronger print for CPI inflation which rose to 1.3% y/y in December. The latter, however, was as expected and a function of energy related base effects. Even if headline CPI is driven higher by oil prices, this will not impact core inflation, nor will it imply that the ECB is any closer to achieving its price stability target."

"As a consequence the inflation release had little impact on the EUR in the spot market. Despite the EUR’s lacklustre performance of late, the market is of the view that the EUR can outperform the USD this year.

"The Bloomberg Q4 2020 consensus stands at EUR/USD1.15.This represents a significantly pared back set of expectations for the EUR compared with recent years. One year ago, the market had expected EUR/USD to end 2019 at 1.20. At the start of 2018, the end year consensus forecast stood at EUR/USD1.22."