Even though futures trading represents only a small component of the overall currency market (most currency transactions are over the counter), the CFTC Commitment of Traders Report gives a good indication of speculative position buildup. And as before, the short euro trade continues to be the bet of choice.
GS: - EUR net shorts rose yet again to -$25.7 bn from -$25.4 bn last week and our positioning score moved from -9.1 last week to -9.2 this week, indicating slightly larger EUR net shorts once adjusting for open interest and the rate differential.The Goldman's positioning score is an indicator of how "crowded" this trade is.
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| Source: GS |
Clearly the fundamentals are in favor of betting against the euro. But one has to be careful of the technicals, as the reversal of this trade could become quite violent.
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