Citi on EUR/USD: 1.18 an important level to watch
A snippet from Citi on the euro, this they describe as a "Global Macro Strategy Ad Hoc Comment"
EUR Positioning: What's Going On?
- CFTC positioning data shows that the net speculative position in the EUR/USD contract is currently long 112k contracts. Despite the USD rally over the past few weeks, this is only a reduction of ~35k contracts from the all-time net speculative long position of +147k contracts.
- The first significant wave of EUR/USD buying was in May 2017. Back then there was a build to ~80k contract net long within 6 weeks. Meanwhile spot moved from 1.09 - 1.12.
- The second major wave came around the time of US fiscal stimulus, which saw aggressive USD and UST selling, mostly in January. EUR/USD net positioning moved from 81k contracts net long to 147k contracts net long within 6 weeks. The equivalent spot move was from 1.1740 - 1.24.
- Therefore, absent a confirmed and sustained break of 1.18, it's unlikely that we see the unwind of "wave two" or even begin to spook "wave 1"
As Asia is getting underway here this morning EUR/USD is testing tis US timezone low, barely above the 1.18 level Citi highlights