EUR Shorts Hit New Record High

Tyler Durden's picture

Whether or not the European deterioration is real or not, one thing is certain: FX traders aren't sticking around to bet on a rebound. As of Friday, the net non-commercial position in the EUR currency was at -173,869 contracts or the biggest net short in history, surging by 30k contract over the prior week, and by a record 70k contracts in the past two weeks as things in Europe unwound rapidly. The short position is greater than the last such record hit back on January 24, when the net short was -171K, and the LTRO effect was yet expected to take hold. Naturally, with such a massive surge in shorts in a short period of time, this means that the likelihood of major short squeezes is substantial on even the most innocuous of news, such as a G8 summit which promises much but delivers nothing, or China once again saying it will gladly focus on growth (as opposed to what? non-growth?), or some DieBold-inspired leadership change in the Greek pro/anti-bailout polls. Our advice to FX trading readers: be very careful with EURUSD stops: it is very likely that in their pursuit of short covering squeezes, (BIS) algos will take the pair substantially into the offer-side stop limit buffer just to force short hands out, which in turn may initiate short-term covering ramps. Which would be great for Europe - after all what better indication of the viability of the continent than some algos tripping over each other and generating momentum.

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GeneMarchbanks's picture

Can only mean one thing: short squeeze cometh.

Aziz's picture

Yeah, I'm not even sure in a worst-case-scenario that shorting the Euro is the right play. What people need to short is the drachma and the peseta (etc).

firstdivision's picture

Very true, which is why put on a long EURUSD position for now.

bdc63's picture

I'm short EURUSD ... planning on selling it today (or maybe later this week) ... but I think I'll leave the long EURUSD trade to others.  If we do get a short squeeze and see a rally, I'll use it as another opportunity to go short again sometime in the future.  The euro is NOT fixed and most likely never will be.

slaughterer's picture

GS saying they are shorting the retail index last week, and now record short interest EUR/USD with record algo involvement in FX trading since last week.  Sorry, but this will be a war of the machines this week; human traders with well-calculated stops will get wiped out.  EUR/USD could see 1.30 again after the carnage ... But one thing: what does Stolper say?

dannyboy's picture

If Stolper had said anything about the EURUSD, there wouldn't be a need for this article as it would be an instant fade trade for everyone.

Boilermaker's picture

And just look at that magical ES being forced up by the hand of god.

Golly, seems odd.  Must be an 'oversold' condition / bounce.  Let's get back to 1,300 SPX and then act like it's a victory for the public.  Headlines can read "S&P recaptures 1,300" or "Investors gobble up generational buying opportunities" or "Boy trapped in refrigerator eats own foot".


slaughterer's picture

Cramer is bearish, nuff said.  SPX 1360 here we come. 

bdc63's picture

Not yet.  The way this works is like this:

Cramer goes bearish.  A few days (maybe a couple of weeks) later we have an dreadful stock market day, where the banks get killed.  Crude drops close to $80.  We get a truely God-awful weekly unemployment number (or maybe even May's NFP).  Cramer goes on CNBC and does another "They know NOTHING" rant.  Then Ben 'n Da Boyz release another wave of QE under the cover that the 'people' are begging for it.

Dr. Engali's picture

I might have to take a temporary long position.

cnhedge's picture

Are concerns over a Greek Euro exit overdone ?

Is the Euro area Credibly on Target?

johny2's picture

so it must be time to go long. fx market is not about actual things going on around the world, it is a game of who has more money on the account. and retail fx traders with leverage for sure have least of all the players of the game.

bullionbaron's picture

I think a Greek exit is likely eventually, but doubt it's as close as the market is expecting:

Wouldn't surprise to see Euro shorts squeezed.

PR Guy's picture

I would be surprised if the G8 at the weekend didn't discuss some sort of co-ordinated global CB response this week or next week to make things bounce a bit - probably involving some printing and/or some support for the Euro.

TBT or not TBT's picture

Barry's election campaign may cost more than just a cool billion this time!

Boilermaker's picture

Gutsy gutsy call.  Very bold, indeed.

bdc63's picture

What the heck else would they have been talking about?

falak pema's picture

this is good for euro industry competitivity; devalue money and earn exports.

Euro group wants Eur/USD to 1.2 or 1.1. 

But that will put pressure on USD and WS and you never know what FED might do, QEn to keep USD low. WS up.

ROller coaster and currency war; all the while the sovereigns and the banks mire in insolvency and illiquidity. ECB will have to corner Greece AND then in  on Merkel to squeeze on Eurobond button. No other LT solution in this crazy logic of spiralling risk on. O'bammy wants the Euro to hang in from his own political agenda. FED/ECB pumps ready to splurge. 

Nussi34's picture

Bad for the people. A weak currency is not good for the people of these countries

tuttisaluti's picture

I think most of the bad news are already priced in. I would go long.

Catullus's picture

To which the Fed is on the other side of the Dollar short.

Monedas's picture

The Socialist mob will steal....that is their nature !  If the Socialist mob is giving a green light to steal....they will steal, also !  Scrape 'em off !      Monedas     1929      Comedy Jihad I Ran Over My Own Dog !  (I'm recovering nicely....the dog died !)

firstdivision's picture

I can do nothing but LOL at the natty market.  Record amounts of storage, demand still curtailed, but price nearly doubles over the past month.  All about reduced rigs I guess. 

Bag Of Meat's picture

EUR looking... out of s(h)orts

Ba dum tss

Monedas's picture

In the "Bell Curve" of world economies":     -x domain is countries more than 50% socialist, +x domain is countries more than 50% capitalist, +y domain is the country count (there is no -y domain) !    Most capitalist countries are 50/50 free/slave....the rest are more slave than free....culminating in North Korea 99% slave !  There is no positive domain....the most capitalistic countries are only half free !  The right side of the bell curve doesn't exist ! There is no capitalist equivalent to Cuba, Zimbabwe, Norko !  You call that a controlled experiment ?  Greece is maybe 25% Capitalist/75% Socialist....but Capitalism will get the blame ?    Monedas   1929     Comedy Jihad Looking For The Capitalist Equivalent To North Korea

Shock and Aweful's picture

When eveyone starts to rush to one side of the boat or the other....the fucker usually tips overs.

Anytime I ever see anything about "longs at highest level ever"...or "shorts at record levels"....I start thinking it's time to pack it up.