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EUR remains heavy – Westpac

FXStreet (Edinburgh) - The research team at Westpac Global Strategy Group still sees the single currency losing ground albeit at a slower pace due to extreme positioning.

Key Quotes

“The heaviest net short EUR spec positions since Jul 2012 should at least slow the pace of EUR/USD decline, given that mid-2012 was when EMU sovereign risk was still the key debate (the OMT bond backstop was announced Sep 2012)”.

“The ECB’s surprise rate cut and less surprising promise of ABS purchases in Oct have produced sharply lower trading ranges but this week should not be nearly so dramatic”.

“Any fresh short EUR positions will require patience, but with many investors assuming large scale QE is only a matter of time, short-covering bounces are likely to be modest, perhaps low 1.3000s at most”.

“One month target 1.2750”.

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