Speculators in IMM euro futures built up the biggest net short euro position since early 2000 during the trading week ending June 21, data released on Friday showed. Speculators increased the net short euro position to 21,282 contracts, from a net short position of 11,702 contracts reported in the previous week. Being "long" a currency is effectively a bet that it will strengthen, while "short" positions are bets that a currency will weaken.
"Based on the subsequent sell-off of the euro since Tuesday, I would consider the net short position has built up a bit since but will not build appreciably unless we see a sustained fall of the euro below 1.20 dollars ," said T.J. Marta, senior currency strategist with RBC Capital Markets in New York.
The euro briefly dipped below 1.20 dollars, hitting 10-month lows against the dollar earlier on Friday around 1.1984 dollars according to Reuters data.
The data from the Commodity Futures Trading Commission'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 speculative position conflicts with the positioning of the more influential commercial players.
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