The latest IMM data cover the week from 31 March to 7 April 2015.
Friday's IMM positioning data reveal investors have cut their bearish EUR positions. However, in an historical context, the move was insignificant and non-commercial EUR positioning remains close to a record low at the 2nd percentile. For some time, we have argued that the move higher in EUR/USD over the past month should prove temporary as the negative seasonal effects on US data wane, exporters adapt to a stronger dollar and markets begin pricing a 2015 Fed hike more aggressively. Indeed, Wednesday's Fed minutes for the March meeting surprised markets by revealing that 'several' of the board's 17 members regarded June as the most likely month for take-off. Together with an almost 15-year low in the jobless claims figure, this has sent EUR/USD below 1.06 - in our view marking the beginning of the next move lower in the cross. This week we expect markets to continue focusing on US data - specifically, we expect a strong retail sales figure to fuel demand for the 'greenback'. Meanwhile, we still expect excess liquidity in the eurozone to weigh on the EUR as the search for yield includes foreign assets and foreign investors maintain high hedge ratios on EUR-denominated exposure.
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