But that doesn't tell the whole story
The CFTC data released on Friday only covers positions up until 9 April (last Tuesday). And since then, EUR/USD has actually climbed from 1.1250 levels to just above the 1.1300 handle currently. While the euro doesn't have a lot going for it fundamentally, a possible squeeze in short positions is certainly something to consider in the way price action has been behaving over the past few sessions.
Short positions now surpass 100k contracts, which doesn't seem like a big deal relative to historical levels as we saw back in 2014 to 2016. However, markets never move in a straight line, do they?
The Eurozone economy still has some green shoots that is still underpinning it for the time being and that's reason enough for a slight squeeze (it would seem). However, the overall outlook remains more bleak with growth slowdown likely to continue in Q2 and the threat of US tariffs on autos also very much in the picture now. Not to forget, there's also the risk of potential surprises in the European Parliament elections next month.
Add to the fact that inflationary pressures are softening and expected to weaken further in the coming months, it's hard to imagine the euro sustaining a rally for a prolonged period. That makes the run higher in the past few sessions look more like a squeeze than the start of a solid rally back to the upside for the euro.
