The research team at Nomura explains that euro continued to grind higher this week and looking into investor positioning in the currency, they find mixed signals.
“FX-focused asset managers and equity investors are very long euros, while FX-focused hedge funds and bond managers are very short euros. Superficially, the latter appear to be more important for turns in the euro, which should support a bullish euro view. One caveat would be that expectations of ECB tapering communication appear to be gathering around the upcoming ECB meeting on 8 June. This could pose a short-term downside risk to the euro, but it shouldn’t derail the medium outlook in our view.”
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