The latest IMM data covers the week from 30 December 2014 to 6 January 2015.
IMM positioning data released on Friday revealed the fourth consecutive week of bearish EUR builds . Speculative EUR positioning has consequently moved below the 4th percentile in a historical perspective - a level last seen in the summer of 2012 when ECB president Draghi held his famous whatever it takes speech. The catalyst in the renewed bearish EUR trend was initially USD profit taking ahead of year-end but has in recent weeks been accelerated by a combination of ECB QE speculations, fears of a Greek EUR exit, a risk premium on Russian default and a further decline in oil prices. Fundamentally, we agree on the bearish EUR/USD trend in the short run and indeed historically positioning has not been a barrier for a move lower in the cross. Near term, we expect EUR/USD to fall further ahead of an ECB QE announcement on 22 January and the Greek election on 25 January and we target the cross at 1.16 in 1M. In the medium term, however, rebounding euro area growth and monetary repricing should support the EUR and we expect the cross to rebound from our 6M target of 1.12 towards a level around 1.17 in one year.
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