Francesco Pesole, FX strategist at ING, notes that according to the CFTC data referring to the period 9-16 October, speculative positions on the common currency remained flat at -15% (of open interest) despite EUR/USD being broadly supported throughout the same period.

Key Quotes

“We suspect this mirrors the market’s reluctance to enter EUR longs given a medium-term outlook that remains gloomy for eurozone sentiment.”

“In particular, latest data-flows (CPI, Industrial production, ZEW) still failed to signal any relief in the battered euro-area economy and we struggle to see ECB efforts on the monetary side to be sufficient to trigger a change of direction.”

“When adding the non-negligible risk of more US tariffs on eurozone exports, the low market appetite for the euro seems even more warranted. In line with this view, we expect EUR/USD to head back below 1.10 by the end of the year.”