CIBC FX Strategy Research remains structurally bullish on the EUR on the back of the ECB likely move to start winding down stimulus as the economy improves.
However, in the near-term CIBC notes that the one factor that appears to have stalled the currency’s appreciation is positioning, which has already swung significantly.
“While net long positions aren’t anywhere near as extreme as the shorts seen in prior years, they are at the top end of the range observed even before the financial crisis,” CIBC adds.
As such, Nordea remains bullish on EUR long-term but expects that some profit taking could be seen before another leg higher begins.
Source: CIBC Economics – CIBC Capital Markets
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