Improving spot flows and hedge unwinding support the Euro, though weak forward demand caps broader conviction before the ECB decision.
The Euro is stabilizing ahead of the European Central Bank’s decision, driven by rising spot demand and hedge unwinding. EUR/USD is seeing modest buying interest, though overall conviction remains limited due to weak forward and swaps demand.
Net exposure to Eurozone assets has reached its highest level in over two years, but onshore investors are not yet increasing forward EUR positions. This lack of broader participation restrains a full recovery, despite improving cross-border hedging trends.
EUR/GBP appears more attractive on a risk-reward basis, as under-owned positions could rebound if the Pound’s momentum weakens. However, the pair has faced net sales this week, signaling cautious positioning.