Hedge Fund Euro Shorts Rise to Highest Level Since March 2020
nashnova research
Hedge funds have pushed net euro short contracts to 94,138 — the highest since March 2020 — as France's fiscal gridlock and political unrest drive a renewed wave of bearish bets against the single currency.
How large is the short position now?
CFTC data show leveraged traders held roughly €11.8 billion (≈$13.2 billion) in euro short positions as of the week ending October 20.
Net short contracts rose by 1,305 from the prior week to 94,138 — the highest contract count since March 2020.
This means → speculative capital is concentrating on one bet — that the euro keeps weakening — and the pace of accumulation is accelerating.
Why has France become the epicenter?
French lawmakers are deadlocked over how to tackle the country's debt burden, with no agreement on a fiscal consolidation path.
Protesters and police continue to clash domestically; the government expects tensions to escalate further this weekend.
In plain terms = France is running up too much debt while its politicians can't agree on a fix — the exact "fiscal + political double risk" investors fear most.
Can the ECB keep raising rates?
Speculators have held a net euro short since February this year; this month's turmoil has deepened concerns about eurozone growth.
Markets are now questioning whether the ECB will keep hiking — and by how much — a doubt that could widen the rate gap between the eurozone and the U.S.
This means → if the ECB is forced to slow while the Fed stays high, capital will keep flowing from euros into dollars.
How much further can the euro fall?
EUR/USD extended its decline this week after briefly snapping a five-week losing streak, resuming its slide with an expected weekly loss of about 0.4%.
Whether the euro short peaks depends on when France's fiscal and political risks become clearer.
This reflects a straightforward market logic: until France's problems are resolved, the euro lacks a catalyst to rebound.
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