Big U.S. Bank Cuts Its EUR/USD Long

09/24/2020

In its daily note to clients, J.P Morgan said it was out of their euro longs before Wednesday's euro zone PMI data, which did little to alleviate concern over growth but weren't bad enough to induce another aggressive sell-off.

Lack of good news isn't favourable for the outlook of high beta, JPM said, noting that U.S. President Donald Trump didn't help sentiment with his comment that the outcome of the U.S. election will end up in the Supreme Court.
The dollar benefits from current concerns, the bank said, and works against the euro and its long IMM positioning.


Hedge funds have reduced positions substantially, JPM noted, but real money remain heavily invested, according to their internal flow, although they have turned small sellers recently, and thus, an interesting dynamic to monitor.

The bank say that while EUR/USD remains under 1.1700/20, the danger remains to the downside.

FX option markets are more balanced now, but starting to add downside risk premium