Forex Flash: IMM data reveals abundance of EUR longs – UBS

According to the UBS Analyst Team, “In terms of positioning we note that speculative investors may now be long the euro, as suggested by IMM data as well as plenty of anecdotal evidence. Overall however, we continue to argue that investors remain structurally short the euro and the Eurozone. What this means, in our view, is that the risk of short-term downward corrections is high, particularly if any of the political issues mentioned in this note were to surprise negatively.”

As such, “This is why we would not go long into this weekend's Italian elections despite, our 1m EUR/USD target of 1.3700. However, as long as the global market situation remains relatively stable, allowing for the Eurozone situation to normalize further, then this might force more money back into the single currency, hence providing gentle but steady upside pressure.” the team suggests.