Speculators in euro futures grew the net long position to its largest on record in the week ended July 20, data from the Commodity Futures Trading Commission showed on Friday.
The data from the CFTC's Commitments of Traders report on speculative positioning are used by analysts as an indicator of future market direction.
For example, extreme net long speculative positions often signal a decline in the currency, especially if that position conflicts with the positioning of the more influential commercial players.
Speculators generally are trend followers seeking to pick a precise top or bottom in the market.
Euro futures speculators extended the net long position to 36,101 contracts from 31,012 a week earlier.
Currency analysts generally believe the COT signals for future euro direction are weaker than those of other currencies.
However, the extension of the net long position preceded a rapid euro sell-off from Tuesday through Friday.
During the CFTC's reporting period, the euro gained to a high of $1.2461 on July 19.
The single currency declined to as low as $1.2089 on Friday, strengthening after Federal Reserve Chairman Alan Greenspan's upbeat assessment of the economy this week bolstered interest rate hike expectations.
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