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19 May 2015
EUR/USD: negative bias – RBS
FXStreet (Barcelona) - Brian Mangwiro, Strategist at RBS, shares the spec positioning data and the outlook for EUR/USD.
Key Quotes
“Speculative shorts fell 11.2k (~6%) on the week to -179k. Current levels are 25% off the year’s and all-time highs and also the smallest net speculative short since the March FOMC meeting. The short covering was predominantly from Levered players. Their net short fell 11k to -107.5k and back to Sep’14 levels (excluding the temporary dip after the Dec’14 FOMC meeting). Asset Managers net short continues to rise, up 9k w/w to -60.4k, and only 2k off record highs.”
“Strategy: Our bias is to remain short EUR/USD. If you share the same view, it’s worthwhile considering the US curve steepener positions above as a hedge as discussed above. Alternatively, you can use the recent collapse in vols to Buy short dated (1wk-1m) EUR/USD calls as an overlay to short cash positions. We would highlight that if and as EUR FI yields retrace lower, EUR/cross could remain well-supported on Dollar weakness.”
Key Quotes
“Speculative shorts fell 11.2k (~6%) on the week to -179k. Current levels are 25% off the year’s and all-time highs and also the smallest net speculative short since the March FOMC meeting. The short covering was predominantly from Levered players. Their net short fell 11k to -107.5k and back to Sep’14 levels (excluding the temporary dip after the Dec’14 FOMC meeting). Asset Managers net short continues to rise, up 9k w/w to -60.4k, and only 2k off record highs.”
“Strategy: Our bias is to remain short EUR/USD. If you share the same view, it’s worthwhile considering the US curve steepener positions above as a hedge as discussed above. Alternatively, you can use the recent collapse in vols to Buy short dated (1wk-1m) EUR/USD calls as an overlay to short cash positions. We would highlight that if and as EUR FI yields retrace lower, EUR/cross could remain well-supported on Dollar weakness.”