We think that investors will increasingly start taking profit on stretched market positions ahead of Easter.
It seems investors are starting to do precisely that in the case of US stocks and growing geopolitical tensions could accelerate that process.
We also believe that the market continues to run considerable USD longs. Chances are therefore that the dollar underperformance against liquid majors like JPY, EUR and CHF could persist in the near term.
The current bout of risk off could benefit EUR as it could force investors to unwind carry trades funded with the single currency.
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